re 


I 


I 


The 


Progressive  Series 

Questions  in 
Advanced  Bookkeeping 

for 
DRILL,    TEST    AND    REVIEW 


By 

ISAAC  PRICE,  A.M. 

w 
Washington  Irving  High  School. 
Ne-iv   York  Evening  High  School  for  Men. 

Author: 

'Direct  Method  of  Teaching  English  to  Foreigners,"  "Compre 

hensive  Question  and  Answer  Book,"  "Outlines 

in  American  History." 


HINDS,  HAYDEN  &  ELDREDGE,  Inc. 

NEW  YORK       CHICAGO       PHILADELPHIA 


/ 


5 

^ 


<b 


Copyright,   1918,  by 
HINDS,  HAYDEN  &  ELDREDGE,  INC. 


International   Copyright   Secured 


t     « 

*      • 
,      re        €••••••  •*  • 


PREFACE. 


A  practical  Question  and  Answer  Book  should  be  com- 
prehensive in  scope  without  having  too  many  and  too  de- 
tailed questions.  It  should  furnish  abundant  material  for 
drill,  test,  and  review  of  the  subject  by  means  of  well 
arranged  and  well  graded  questions,  and  should  aim  to 
cultivate  in  the  student  those  qualities  brought  out  in  a 
good  recitation  by  a  skilled  teacher. 

With  these  objects  in  mind  this  series  of  books  has  been 
written.  The  separate  books  are  intended,  not  only 
for  beginners,  but  also  for  students  pursuing  advanced 
and  review  work.  Care  has  been  taken  to  make  each  book 
complete.  The  papers  given  at  civil  service,  college  en- 
trance, and  Regents  examinations  have  been  carefully 
culled  for  suitable  questions,  and  the  material  arranged 
topically  and  logically  to  emphasize  principles  as  well  as 
essential  facts.  The  answers  are  supported  by  the  latest 
authorities  and  in  consonance  with  the  accepted  texts  for 
the  best  elementary  and  secondary  schools.  To  make  the 
work  more  helpful,  diagrams,  illustrations,  maps,  topical 
outlines,  and  glossaries  have  been  included. 

Acknowledgment  is  due  to  the  many  experienced  teach- 
ers who  have  freely  offered  suggestions  and  criticisms  de- 
signed to  make  this  a  most  helpful  "text-book." 


'>(> 


,  •  >    ■ 

>    • 


•  •     • 


The  theory  and  practice  of  Advanced  Bookkeeping  and  Office 
Practice  is  presented  in  this  book.  The  first  section  is  devoted 
to  the  theory  and  the  descriptive  features,  while  the  Regents 
Questions  for  the  past  several  years  are  found  in  the  latter 
half.  The  latest  texts  and  authorities,  as  well  as  a  number  of 
teachers  in  the  New  York  City  High  Schools,  have  been  con- 
sulted by  the  author,  who  desires  to  express  his  indebtedness  to 
them  for  their  kindly  aid  and  assistance. 


To  My  Son 

LEONARD 

whose  questions 
come  from  the  mind  and 

the  heart 
this  series  is  affectionately 

DEDICATED 


BOOKKEEPING  TERMS  AND  THEIR  EQUIVALENTS  IN 

ACCOUNTING.  PRACTICE 


Open  an  account 

Make  an  entry 

Resources 

Gains 

Loss  &  Gain  Account 

Business  Statement 
Loss  &  Gain  Statement 

Financial  Statement; 
Statement  of  Resources 
and  Liabilities 


Set  up  an  account 
Frame  an  entry- 
Assets 
Profits 
Profit  &  Loss  Account 

'  Statement  of  Income, 
Profit  &  Loss ;  Trading 
Statement 

Balance  Sheet ; 
Statement  of  Assets 
and  Liabilities. 


Questions  in  Advanced   Bookkeeping 

1.  What  is  bookkeeping? 

2.  Why  is  a  proper  set  of  books,  or  a  proper  system 
of  bookkeeping,  essential  to  the  proper  conduct  of  a  busi- 
ness? 

3.  What  is  meant  by  a  business  transaction? 

4.  In  how  many  ways  does  any  business  transaction 
affect  the  business? 

5.  Define  and  explain:  (a)  Debit,  (b)  credit,  (c) 
debtor  (Dr.),  (d)  creditor  (Cr.). 

6.  What  is  an  account? 

7.  What  is  meant  by  (a)  opening  an  account,  (b) 
closing  an  account  ? 

8.  What  are  (a)  real  accounts,  (b)  nominal  ac- 
counts? 

9.  W'hat  is  a  personal  account? 

10.  Name  (a)  the  real  accounts,  (b)  the  nominal  ac- 
counts. 

11.  What  are  trading  accounts? 

12.  How  are  trading  accounts  closed? 

13.  Name  the  trading  accounts. 

14.  What  is  a  controlling  account? 

15.  What  is  the  use  of  a  suspense  account? 

16.  What  is  meant  by  (a)  an  original  entry,  (b)  an 
adjustment  entry? 

17.  What  is  the  difference  between  (a)  a  simple  en- 
try and  (b)  a  compound  entry? 

18.  What  is  a  book  of  original  entry? 

19.  Name  (a)  the  principal,  (b)  the  auxiliary,  (c) 
the  subsidiary  books,  and  tell  why  they  are  so  called. 

20.  Describe  the  Daybook  and  tell  what  it  is  used  for. 

7 


8  Questions  in  Advanced  Bookkeeping 

21.  What  is  a  Journal?     What  is  it  used  for? 

22.  What  is  the  use  of  the  Journal-Daybook? 

23.  Describe  the  Cashbook  and  its  use. 

24.  What  is  the  Sales  Book  ? 

25.  Describe  the  Ledger  and  its  use. 

26.  Tell  what  the  Invoice  or  Purchase  Book  is  used 
for. 

27.  Describe  the  use  of  the  Bill  or  Notes  Book. 

28.  What  is  meant  by  journalizing? 

29.  Give  the  rule  for  journalizing. 

30.  What  is  meant  by  posting? 

31.  What  is  meant  by  (a)  charging,  (b)  crediting? 

32.  What  is  a  Customer's  Ledger? 

33.  What  is  meant  by  cash?  What  does  it  generally 
include  ? 

34.  What  is  an  imprest  fund?     What  is  its  use? 

35.  What  is  meant  by  merchandise  ? 

36.  What  is  expense  ?  Give  a  rule  to  determine  what 
items  should  be  charged  to  the  expense  account. 

37.  When  is  Cash  (a)  debited,  (b)  credited?  (c) 
Why  must  the  debit  side  of  the  Cash  Account  or  Book 
always  be  the  larger? 

38.  When  are  Personal  Accounts  (a)  debited,  (b) 
credited  ? 

39.  Tell  when  Expense  is  (a)  debited,  (b)  credited? 

40.  When  is  Merchandise  (a)  debited,  (b)  credited? 

41.  Where  no  separate  account  for  cartage,  drayage 
and  freight  is  kept  in  the  Ledger  or  the  items  are  not 
charged  to  expense,  it  is  usual  to  debit  the  Merchandise 
Account  for  these  items.  Why  is  this  the  proper  pro- 
cedure ? 

42.  When  is  the  Notes  Receivable  Account  (a)  deb- 
ited, (b)  credited? 


Questions  in  Advanced  Bookkeeping  9 

43.  (a)   What  is  meant  by  Accounts  Receivable  Ac- 
count?    Tell  when  it  is  (b)  debited,  (c)  credited. 

44.  (a)   What  is  the  Reserve  for  Bad  Debts  Account? 

(b)  Tell  how  this  account  should  be  treated. 

45.  Give  an  explanation  of  the  Prepaid  Insurance  Ac- 
count. 

46.  Give  an  explanation  of  the  Accrued  Interest  Re- 
ceivable Account. 

47.  Give  an  explanation  of  the  Store  (Factory,  Office) 
Property  Account. 

48.  Give  an  explanation  of  the  Warehouse  Property 
Account. 

49.  Give  an  explanation  of  the   Store    (Office,   Fac- 
tory)  Equipment  Account. 

50.  Give  an  explanation  of  the  Delivery  Equipment 
Account. 

51.  When  is  the  Xotes  Payable  Account   (a)   cred- 
ited, (b)  debited. 

52.  What  is  the  object  of  the  Notes  Payable  Account? 

53.  (a)   What   is   meant   by   Accounts    Payable   Ac- 
count?    Tell    when   Accounts    Payable   is    (b)    debited, 

(c)  credited. 

54.  Give  an  explanation  of  the  Accrued  Interest  Pay- 
able Account. 

55.  Give  an  explanation  of  (a)  the  Accrued  Salaries 
and  (b)  Accrued  Taxes  Accounts. 

56.  What   is   the   Proprietor's    (Drawing)    Account? 
Tell  how  it  is  handled. 

57.  Tell  how  the  Mortgages  Payable^ Account  is  han- 
dled. 

58.  Discuss  the  Proprietor's  Capital  Account. 

59.  Discuss  the  Sales  Account 


io  Questions  in  Advanced  Bookkeeping 

60.  Tell  how  the  Sales  Allowances  Account  is  han- 
dled. 

61.  Discuss  the  Merchandise  Purchases  Account. 

62.  Tell  how  each  of  the  following  accounts  is  han- 
dled:  (a)  Management  and  Office  (Factory,  Warehouse, 
etc.)  Salaries,  (b)  Salaries  and  Wages  of  Buying  Force, 
and  (c)  Salaries  and  Wages  of  Sales  Force,  (d)  Sal- 
aries and  Wages  of  Delivery  Force. 

63.  Tell  how  (a)  the  Miscellaneous  Buying  Expense, 
(b)  the  Miscellaneous  Selling  Expense,  and  (c)  the  Mis- 
cellaneous Delivery  Expense  Accounts  are  handled. 

64.  Tell  how  the  Advertising  Account  is  handled. 

65.  Discuss  the  Office  Supplies  and  Expense  Ac- 
count. 

66.  Give  an  explanation  of  the  Insurance  on  Stock 
and  Store  Equipment  Account. 

67.  Tell  how  the  Account  for  Losses  from  Bad  Debts 
is  treated. 

68.  Discuss  the  Miscellaneous  General  Expense  Ac- 
count. 

69.  Tell  how  the  Rent  and  the  Rent  Income  Accounts 
are  handled. 

70.  Discuss  the  Trading  Account. 

71.  Discuss  the  Profit  and  Loss  Account  (From 
Trading  Operations). 

72.  Discuss  the  handling  of  the  Interest  and  Dis- 
count Accounts. 

73.  Tell  how  (a)  the  Discount  on  Merchandise  Pur- 
chases, and  (b)  the  Discount  on  Merchandise  Sales  Ac- 
counts are  handled. 

74.  Tell  how  the  Miscellaneous  Outside  Income  Ac- 
count is  handled. 


Questions  in  Advanced  Bookkeeping  ii 

75.  What    are    (a)    Accounts    Receivable,    (b)    Ac- 
counts Payable  ? 

76.  What    are    (a)    Notes    (Bills)    Receivable,    (b) 
Notes  (Bills)   Payable,  (e)   Accommodation  Note? 

77.  What  is  meant  by  (a)  net  investment,  (b)  aver- 
age investment? 

7S.  What  is  (a)  an  inventory,  (b)  a  merchandise  in- 
ventory ? 

79.  What  disposition  is  made  of  the  inventories? 
Why  ? 

80.  Explain  the  necessity  for  taking  an  inventory  of 
merchandise  before  making  out  the  statements. 

81.  Explain  how  a  merchandise  inventory  is  taken. 

82.  Where  does  the  merchandise  inventory  appear 
after  the  Ledger  is  closed? 

83.  What  is  a  Trial  Balance?  What  does  it  show? 
What  is  its  object  or  purpose? 

84.  What  accounts  appear  in  the  Trial  Balance? 

85.  Explain  why  the  debit  and  the  credit  columns  of 
a  Trial  Balance  by  either  totals  or  differences  should  be 
equal. 

86.  If  an  error  occurs  in  a  Trial  Balance  tell  what 
procedure  is  to  be  followed. 

87.  The  total  of  a  Trial  Balance  are  equal.  Does 
this  show  that  the  work  on  the  Ledger  is  absolutely  cor- 
rect? 

88.  Illustrate  a  Trial  Balance. 

89.  What  is  a  Balance  Sheet  ?     What  does  it  show  ? 

90.  Define  (a)  Resource  or  Asset,  and  (b)  Liability. 

91.  What  are  each  of  the  following:  (a)  Liquid  or 
floating  asset,  (b)  deferred  assets,  (c)  trade  assets,  (d) 
fixed  assets? 

92.  Define  each  of  the  following:   (a)   Liquid  liabil- 


12  Questions  in  Advanced  Bookkeeping 

ity,   (b)   deferred  liability,   (c)   fixed  liability,   (d)   con- 
tingent liability. 

93.  What  is  a  Trading  or  Business  Statement?  What 
is  its  object  and  purpose  and  its  importance? 

94.  Illustrate  a  Trading  or  Business  Statement. 

95.  What  is  a  Financial  Statement?  What  does  it 
show  ? 

96.  Illustrate  a  Financial  Statement. 

97.  Define  each  of  the  following:  (a)  Profit  (gain), 
(b)  loss,  (c)  gross  profit,  (d)  net  profit,  (e)  gross  loss, 
(f)  net  loss. 

98.  What  is  meant  by  (a)  Present  Worth,  (b)  cap- 
ital, (c)  solvency,  (d)  insolvency? 

99.  Explain  the  method  of  proving  a  Financial  State- 
ment. 

100.  What  class  of  accounts  should  be  closed  first? 

101.  How  are  the  Profit  and  Loss  Accounts  distin- 
guished from  the  Resource  and  Liabilities  Accounts? 

102.  What  accounts  are  included  in  both  the  Trad- 
ing and  the  Financial  Statements  ? 

103.  Illustrate  a  Profit  and  Loss  Statement? 

104.  What  does  the  Profit  and  Loss  Statement  show? 

105.  How  can  you  tell  whether  the  Profit  and  Loss 
Account  shows  a  gain  or  a  loss  ? 

106.  Tell  what  the  Resources  and  Liabilities  State- 
ment shows. 

107.  (a)  What  disposition  is  made  of  the  Loss  and 
Gain  (Profit  and  Loss)  Account  difference?  (b)  Why 
should  a  Loss  and  Gain  Account  be  opened  in  the  Led- 
ger? 

108.  When  are  loss  and  gain  (profit  and  loss)  ac- 
counts closed  in  business  ? 


Questions  in  Advanced  Bookkeeping  13 

109.  When  are  resource  and  liabilities  accounts- 
closed  in  business? 

110.  When  does  a  personal  account  (account  payable 
and  account  receivable)  show  (a)  a  resource,  (b)  a  lia- 
bility ? 

111.  Are  the  net  resources  of  a  firm  any  less  after  it 
has  paid  its  own  (a)  non-interest-bearing,  (b)  interest- 
bearing  notes?     Why? 

112.  On  what  side  is  the  resource  inventory  entered 
in  order  to  determine  the  profit  or  loss  on  the  account? 

113.  Under  what  circumstance  is  a  loss  or  gain  likely 
to  occur  in  the  Real  Estate  Account  ? 

114.  How  is  the  Proprietor's  Account  closed  when, 
there  is  (a)  a  net  profit,  (b)  a  net  loss? 

115.  How  is  the  Proprietor's  Net  Investment  deter- 
mined? 

116.  Where  does  the  Proprietor's  Present  Worth  ap- 
pear after  the  Ledger  is  balanced  and  closed? 

117.  On  which  side  of  the  Ledger  are  the  following 
found:  (a)  Profits,  (b)  losses,  (c)  resources,  and  (d) 
liabilities? 

118.  Name  the  accounts  in  which  there  should  always 
appear  (a)  a  debit,  (b)  a  credit  difference.     Why? 

119.  To  what  does  the  sum  of  the  Present  Worth 
and  the  Liabilities  equal? 

120.  What  is  a  note  or  promissory  note? 

121.  In  a  note  who  is  (a)  the  maker,  and  (b)  the 
payee  ? 

122.  Distinguish  between  (a)  a  negotiable  note,  and 
(b)  a  non-negotiable  note,  (c)  an  accommodation  note, 
(d)  a  collateral  note. 

123.  Wrhatisa  draft? 


14  Questions  in  Advanced  Bookkeeping 

124.  In  a  draft  who  are  (a)  the  drawer,  (b)  the 
drawee,  and  (c)  the  payee? 

125.  What  is  meant  by  (a)  a  sight  draft,  (b)  a  time 
draft? 

126.  What  is  the  difference  between  (a)  a  two-party 
draft  and  (b)  a  three-party  draft? 

127.  What  is  a  bill  of  exchange? 

128.  Define  acceptance. 

129.  What  is  meant  by  an  indorsement  (endorse- 
ment) ?  What  is  the  importance  and  value  of  an  in- 
dorsement ? 

130.  Illustrate  the  various  forms  and  kinds  of  in- 
dorsement. 

131.  Illustrate  the  difference  between  interest  and  dis- 
count in  a  note  or  a  draft. 

132.  Define  and  illustrate  each  of  the  following:  (a) 
Check,  (b)  certified  check,  (c)  cashier's  check,  (d)  cer- 
tificate of  deposit,  and  (e)  bank  draft. 

133.  What  is  a  voucher? 

134.  Define  and  illustrate  (a)  bill,  (b)  invoice,  (c) 
order. 

135.  Define  and  illustrate  each  of  the  following  terms  : 
(a)  On  Account;  (b)  Net;  (c)  Net  30  days;  (dj  Cash 
3%;  (e)  7,o,  60  days;  (f)  7,o,  Vio.  net  70  days '  (g) 
»/,o,  60  x. 

136.  Define  and  illustrate  what  is  meant  by  a  monthly 
statement. 

137.  Define  and  illustrate  each  of  the  following:  (a) 
Account  Sales,  (b)  consignment,  (c)  consignor,  (d)  con- 
signee, (e)  commission. 

138.  What  is  a  bill  of  lading  (B/L)  ?  Illustrate,  and 
show  the  difference  between  the  various  forms. 


Questions  in  Advanced  Bookkeeping  15 

139.  Write  ten  (10)  abbreviations  or  conventions  in 
common  use  in  bookkeeping,  and  give  the  meaning  of 

each. 

140.  Give  the  meanings  of  the  following  abbrevia- 
tions and  conventions:  (a)  Ck.  (b)  D.  B.  (c)  Inv.  (d) 
Frt.  (e)  Str.  (f)  Payt  (g)  No.  (h)  5  (i)  P  (j)  %. 

141.  (a)  What  is  meant  by  commercial  paper?  (b) 
Give  three  illustrations. 

142.  "  Walters  &  Co.,  Inc.,  have  this  day  made  an 
assignment.  Their  insolvency  is  due  to  the  defalcation 
of  a  consignee.  Wre  shall  realize  in  full  on  their  promis- 
sory note  indorsed  by  J.  P.  and  further  secured  by  col- 
laterals." Define  each  of  the  italicized  words  or  phrases 
in  the  preceding. 

143.  Explain  each  of  the  italicized  words  or  expres- 
sions in  the  following  excerpt:  "A.  &  H.  have  drazvn 
on  us,  at  10  days  sight,  for  the  net  proceeds  of  their  con- 
signment. We  must  honor  their  draft  by  our  acceptance 
and  raise  the  money  on  our  note  secured  by  collateral  or 
an  indorscr. 

144.  The  following  are  from  the  books  of  James 
Thornton : 

(a)  November  1,  1917. 

Cash    (investment)     $4200. 

James    Thornton    $4200. 

(b)  November  2,  1917. 

Expenses    ( rent) 50. 

Edwin  Brooks   (on  acct.) 300. 

Lawton  &  Co.  (per  check) 250. 

(c)  Milwaukee    Stores    1500. 

Merchandise     IdOO. 

Cash    500. 

Notes   Receivable    700. 

M  il waukee    Stores    1-00. 


16  Questions  in  Advanced  Bookkeeping 

State  from  which  book  each  of  the  above  entries  is 
taken  and  explain  the  transaction  each  records.  Tell 
where  each  account  should  appear  again  in  your  system 
of  books. 

145.  When  the  debit  side  of  a  personal  account  is 
greater  than  the  credit  side,  what  does  the  balance  ex- 
press? 

146.  Classify,  as  a  resource  or  a  liability,  each  of  the 
following:  (a)  Bills  (Notes)  Payable,  (b)  Real  Estate, 
(c)  Cash,  (d)  Merchandise,  (e)  Balances  of  Accounts 
Payable. 

147.  Write  the  abbreviations  or  conventions  in  com- 
mon use  for  (a)  Cash  Book,  (b)  Debit,  (c)  Amount  for- 
ward, (d)  pieces,  (e)  collect  on  delivery. 

148.  Give  the  meaning  of  each  of  the  following  con- 
ventions and  abbreviations:  (a)  C.  O.  D.,  (b)  40  off, 
(c)  per,  (d)  f.  o.  b. 

149.  Write  a  joint  and  several,  negotiable,  interest- 
bearing,  promissory  note,  payable  at  the  Exchange  Na- 
tional Bank  of  Brooklyn. 

150.  Define  each  of  the  following:  (a)  Letter  of 
Credit,  (b)  Certificate  of  Deposit,  (c)  Voucher,  (d) 
Protest,  (e)  Lease,  (f)  Lien. 

Journalize  each  of  the  following  transactions : 

151.  Bought  invoice  of  merchandise,  amounting  to 
$175,  from  James  Lorimer  for  cash. 

152.  Sold  R.  H.  Macy  &  Co.  merchandise  amounting 
to  $244  for  cash. 

153.  Bought  of  Corbett  &  Co.  goods  amounting  to 
$126.45,  terms  3%,  10  days. 

154.  Paid  Corbett  &  Co.  the  invoice  in  the  preceding 
transaction. 


Questions  in  Advanced  Bookkeeping  17 

155.  Sold  Franklin  Simon  &  Co.  goods  to  the  amount 
of  $475,  terms  2/G0. 

156.  Received  check  from  Franklin  Simon  &  Co.  in 
payment  of  the  preceding  transaction. 

157.  Sold  R.  II.  Montgomery  &  Co.  a  bill  of  goods 
amounting  to  $1250,  terms,  half  cash;  balance,  3%,  10 
days. 

158.  Received  check  for  $625  on  account  of  preced- 
ing, on  date  of  shipment. 

159.  Received  check  for  balance  due  from  R.  H. 
Montgomery  &  Co. 

160.  Bought  of  Marshall  Field  &  Co.  an  invoice  of 
goods  amounting  to  $744,  terms  $250  cash ;  balance, 
terms,  4%,  10  days. 

161.  Paid  .Marshall  Field  &  Co.  check  for  $250  on 
account. 

162.  Paid  Marshall  Field  &  Co.  in  full  of  balance  of 
account. 

163.  Bought  of  Shipman  &  Sons,  stationery  and  office 
supplies  amounting  to  $76.     Paid  bill. 

164.  Paid  $200  for  two  months'  rental  for  store. 

165.  Received  $100  as  rent  for  part  of  store. 

166.  Sold  merchandise  to  Vernon  &  Conners,  amount- 
ing to  $137.25,  terms,  30-day  note. 

167.  Vernon  &  Conners  paid  their  note  in  full. 

168.  Bought  goods  for  $298  from  James  A.  Hearn  & 
Son  and  gave  a  30-day  note  in  payment. 

169.  Paid  note  in  preceding  transaction. 

170.  Samuel  Johnson  invested  $5000  cash  in  a  print- 
ing and  publishing  business. 

171.  Samuel  Johnson  drew  $125  for  private  use. 

172.  Samuel  Johnson  donated  to  a  bazaar  a  set  of 
books  valued  at  $75. 


18  Questions  in  Advanced  Bookkeeping 

173.  Samuel  Johnson  made  an  additional  investment 
of  $1750  in  cash. 

174.  Walter  Lippman  began  business  with  an  invest- 
ment of  $1500  Cash,  Merchandise  amounting  to  $1500, 
and  Notes  Receivable  amounting  to  $500.  He  owed 
$700  on  accounts  payable  and  $250  on  a  note  in  favor 
of  John  Martin. 

175.  Henry  Farnsworth  discounted  his  own  60-day 
note  at  the  Park  National  Bank,  the  principal  being 
$1500  and  the  discount,  $15. 

176.  Henry  Farnsworth  discounted  Thomas  Shields' 
30-day  note  for  $2000  at  the  Park  National  Bank  for  the 
full  period  of  the  note. 

177.  James  Lawson  sold  his  3-month  note  for  $3000 
to  Thomas  Hollingwood. 

178.  Walter  Emmerich  &  Co.  returned  to  Thomas 
Talcott  &  Co.  a  bill  of  merchandise  which  they  found  de- 
fective and  unsalable.  Amount,  $3287;  terms  on  bill  of 
sale,  3/30  days. 

179.  James  Lowden  borrows  $500  from  his  bank,  giv- 
ing his  two-month  note.  On  the  date  of  maturity  he 
pays  the  note.  Show  all  the  Journal  entries  in  connection 
with  the  complete  transaction. 

180.  On  Jan.  7,  William  Wallace  (A)  receives  a  60- 
day  interest  (6%)-bearing  note  from  Henry  Norr  (B) 
amounting  to  $500.  A  keeps  the  note  until  the  date  of 
maturity,  when  it  is  paid  by  B.  Make  the  Journal  en- 
tries. 

181.  On  Feb.  6,  A  discounts  this  note  at  the  bank  and 
receives  credit  for  the  net  proceeds,  rate  of  discount, 
6%. 

182.  On  Feb.  6,  A  transfers  this  note  to  James  Thorn- 


Questions  in  Advanced  Bookkeeping  19 

ton  (C)  on  account  and  receives  credit  for  principal  plus 
accrued  interest.     Make  entries. 

183.  A  draws  a  sight  draft  on  B  in  favor  of  C. 

184.  A  in  New  York  draws  a  sight  draft  for  $100 
on  B  in  Chicago,  presenting  the  draft  through  the  bank. 
The  draft  is  accepted  and  paid. 

185.  On  Jan.  7  A  draws  a  draft  for  $400  payable  60 
days  after  date  (after  sight)  on  B  in  favor  of  C. 

186.  On  Jan.  9  C  presents  the  draft  to  B  who  ac- 
cepts it. 

187.  On  Jan.  14,  C  discounts  this  acceptance  at  his 
bank,  rate  of  discount  being  6%,  and  receives  credit  for 
the  net  proceeds. 

188.  On  the  date  of  maturity  B  pays  his  acceptance. 

189.  A  in  Albany,  X.  Y.,  consigns  100  bbl.  apples 
valued  at  $200  to  B  in  Xew  York  City. 

190.  A  prepays  freight,  $40. 

191.  B  pays  cartage,  $10,  on  receipt  of  consignment. 

192.  B  sells  50  bbl.  to  C  on  account  at  $2.50  per  bbl. 

193.  B  sells  50  bbl.  to  D  for  cash,  at  $3  per  bbl. 

194.  (a)  B  sends  $100  as  advance  to  A  (or  accepts 
a  sight  draft),  (b)  B  accepts  a  time  draft  drawn  on 
him  by  A. 

195.  Charges  incurred  by  B  amount  to  $7. 

196.  B  pays  1%  insurance  on  consignment. 

197.  Commission  is  5%. 

198.  (a)  B  remits  the  net  proceeds  to  A  by  check, 
(b)  B  remits  by  Xew  York  draft,  exchange  25c.  (c) 
B  places  the  net  proceeds  to  the  credit  of  A.  (d)  B  ac- 
cepts a  sight  draft  (or  time  draft)  drawn  on  him  by  A. 

199.  Figure  gain  or  loss  to  the  consignor. 

200.  Martin  Holman  has  this  day  invested  Cash 
$3000  and  Merchandise  valued  at  $2000. 


20  Questions  in  Advanced  Bookkeeping 

201.  The  Expense  Account  shows  a  balance  of  $276. 
Make  the  Journal  entry  to  close  the  account  into  the  Loss 
&  Gain  Account. 

202.  The  Discount  on  Purchases  Account  shows  a 
balance  of  $427.  Make  the  Journal  entry  to  close  the 
account. 

203.  The  Discount  on  Sales  Account  shows  a  balance 
of  $298.     Frame  the  Journal  entry  to  close  the  account. 

204.  The  Interest  &  Discount  Account  shows  a  bal- 
ance of  $18  on  the  debit  side.  Journalize  the  entry  to 
transfer  balance  and  to  close  the  account. 

205.  The  Merchandise  Account  shows  a  profit  (a 
loss)  of  $2350.  Journalize  the  entry  to  close  the  ac- 
count. 

206.  The  Loss  &  Gain  Account  shows  a  net  gain  (a 
loss)  of  $750.  Show  the  journalized  entry  to  transfer 
the  gain  to  the  Proprietor's  Account. 

207.  The  inventory  of  expense  items  (original  amount 
$200)  shows  an  unexpended  balance  of  $60.  Make  the 
necessary  Journal  entries  to  show  this  amount  in  the 
Loss  &  Gain  Account. 

208.  Show  by  Journal  entry  the  transfer  of  the  old 
Merchandise  Inventory  to  the  Purchases  (Merchandise) 
Account. 

209.  Journalize  the  transfer  of  the  new  Merchandise 
Inventory  to  the  Purchases  (Merchandise)  Account. 

210.  Show  by  Journal  entry  the  determination  of 
gain  (or  loss)  by  a  comparison  of  the  Purchases  and 
Sales  (Merchandise)  Accounts. 

211.  The  Sales  Account  shows  a  gain  (loss)  of  $1350. 
Show  the  Journal  entry  to  transfer  the  balance  to  the 
Loss  &  Gain  Account. 


Questions  in  Advanced  Bookkeeping  21 

212.  State  the  advantages  of  the  card  system  of  keep- 
ing records  over  the  book  system. 

213.  Discuss  the  advantages  of  books  containing  spe- 
cial columns. 

214.  What  advantages  are  gained  from  the  employ- 
ment of  special  columns  in  the  Sales  and  in  the  Pur- 
chases Books? 

215.  What  is  a  partnership  or  copartnership? 

216.  \\  hat  are  the  articles  of  copartnership? 

217.  Xame  the  items  that  should  appear  in  every  co- 
partnership agreement  or  contract. 

218.  How  may  a  partnership  be  dissolved? 

219.  Define  each  of  the  following:  (a)  Corpora- 
tion; (b)  charter;  (c)  franchise. 

220.  Explain  each  of  the  following:  (a)  Capital 
stock,  (b)  capital;  (c)  surplus;  (dj  reserve;  (e)  sink- 
ing fund. 

221.  Explain  each  of  the  following:  (a)  Issued 
stock;  (b)  unissued  stock;  (c)  treasury  stock;  (d)  com- 
mon stock;  (e)  preferred  stock;  (f)  watered  stock;  (g) 
stock  certificate. 

222.  What  are  (a)  dividend,  (b)  cumulative  pre- 
ferred stock,  (c)  non-cumulative  preferred  stock? 

223.  What  are  the  advantages  and  the  disadvantages 
of  incorporation  ? 

224.  How  may  a  corporation  be  dissolved? 

225.  What  are  (a)  raw  materials,  (b)  goods  in 
process,  (c)  finished  goods? 

226.  Define  fa)  prime  cost,  (b)  net  cost,  (c)  gross 
cost,  (d)  burden  or  overhead. 

227.  What  are  (a)  selling  expenses,  (b)  administra- 
tive expenses  ? 


22  Questions  in  Advanced  Bookkeeping 

228.  What  is  the  difference  between  an  account  sales 
and  an  account  purchase? 

229.  Define  each  of  the  following  terms:     (a)  Good 
will;  (b)  depreciation;  (c)  reserves;  (d)  turnover. 

230.  What  is  the  difference  between  single  entry  and 
double  entry  bookkeeping? 

231.  State  the  differences  between  single  and  double 
entry  bookkeeping. 

232.  Tell  in  detail  how  to  change  a  set  of  books  from 
the  single  entry  system  to  the  double  entry  system. 

Make  the  journal  entries  for  the  following  transac- 
tions : 

233.  John  Brooks  and  Henry  Lang  commenced  busi- 
ness under  the  firm  name  of  Brooks  &  Lang,  each  invest- 
ing $2500,  in  cash. 

234.  John  Brooks  and  Henry  Lang  have  formed  a  co- 
partnership. Brooks  invested  $2000  in  cash;  $1000  in 
merchandise ;  and  $2000  in  accounts  receivable.  Lang 
invested  $2000  in  cash;  $2500  in  merchandise;  $1500  in 
accounts  receivable. 

235.  John  Brooks  and  Henry  Lang  have  formed  a  co- 
partnership. Brooks's  investment  consists  of  $2000  in 
cash;  $1000  in  merchandise;  and  $2000  in  accounts  re- 
ceivable. Lang  invested  $2000  in  cash;  $1500  in  mer- 
chandise; $1500  in  accounts  receivable.  The  firm  as- 
sumes the  liabilities  of  each  partner;  Brooks,  accounts 
payable,  $750;  Lang,  accounts  payable,  $1000. 

236.  John  Brooks  and  Henry  Lang  have  this  day 
formed  a  copartnership,  each  partner's  investment  to 
amount  to  $4500.  Brooks  contributed  $2000  in  cash; 
$1000  in  merchandise;  $2000  in  accounts  receivable. 
Lang  contributed  $2000  in  cash;  $1500  in  merchandise; 
$1500  in  accounts  receivable. 


Questions  in  Advanced  Bookkeeping  23 

237.  Brooks  and  Lang  have  this  day  formed  a  co- 
partnership, each  investing  $4000.  Brooks  contributes 
$2000  in  cash;  $1500  in  merchandise;  $1500  in  notes 
receivable  90  days  (45  days  yet  to  run);  accounts 
payable,  $750.  Lang  contributes  $2000  cash,  $1000  in 
merchandise;  $3000  in  60-day  note  receivable  (30  days 
yet  to  run)  ;  accounts  payable,  $800.00. 

238.  The  Manhattan  Chemical  Company  is  incorpo- 
rated under  the  laws  of  the  State  of  New  Jersey  with  an 
authorized  capital  of  $25,000,  divided  into  250  shares, 
each  of  a  par  value  of  $100.  Walter  Lawlor  and  Peter 
Walsh  each  subscribe  for  100  shares,  the  remainder  being 
held  in  the  treasury. 

239.  Walter  Lawlor  and  Peter  Walsh  pay  in  full  for 
the  stock  subscribed  by  them. 

240.  James  Martin  subscribes  for  20  shares  of  stock 
at  par  value. 

241.  Lawlor  &  Walsh  incorporate,  each  one  subscrib- 
ing for  10  shares  Preferred  Stock,  par  value  of  each 
$100,  paying  one-half  cash. 

242.  The  corporation  of  The  Universal  Supply  Com- 
pany has  been  formed  and  organized  to  take  over  the 
patent  rights  of  the  inventor,  James  Foster.  The  author- 
ized capital  is  to  consist  of  $30,000,  divided  into  300 
shares  of  a  par  value  of  $100  each,  of  which  Foster  re- 
ceives 180  shares.  The  other  stock  is  subscribed  for  by 
the  other  directors.     Frame  the  opening  entry. 

243.  (a)  Foster  later  donates  20  shares  to  be  sold  at 
par  to  raise  additional  working  capital,  (b)  These 
shares  are  sold  at  a  premium  of  20  points,  or  dollars. 

244.  James  W.  Reid,  Henry  Light,  Thomas  Manton 
and  Walter  Walker,  forming  the  partnership  of  Reid, 
Walker  &  Co.  have  decided  to  reorganize  and  incorpo- 


24  Questions  in  Advanced  Bookkeeping 

rate.  Their  investments  are  respectively,  $5600,  $7200, 
$4900  and  $8300.  The  authorized  capital  is  $50,000  to 
be  divided  into  500  shares,  each  of  a  par  value  of  $100, 
each  partner  to  receive  share  equal  to  the  amount  of  his 
investment,  the  remainder  being  held  in  the  treasury. 
Frame  the  closing  Journal  entry. 

245.  Bernard  Frank  has  paid  $2000  on  account  of  the 
shares  subscribed  for  by  him.     Show  the  entry. 

246.  The  Manhattan  Chemical  decides  to  set  aside  at 
the  end  of  its  first  year  1918,  a  reserve  for  Bad  Debts 
equal  to  1%  of  the  net  sales  ($55,000)  $550.00. 

247.  During  the  year  1919  its  actual  losses  from  bad 
debts  amounted  to  $350.00. 

248.  At  the  end  of  the  fiscal  year  1919,  the  company 
decided  to  set  aside  $260,  for  Reserve  for  Bad  Debts. 

249.  Suppose  it  had  been  decided  to  set  aside  at  the 
end  of  the  fiscal  year  1919  a  reserve  for  bad  debts  equal 
to  $230. 

250.  Suppose  it  had  decided  to  set  aside  on  Dec.  31, 
1919,  an  additional  reserve  of  $145. 

251.  Suppose  it  had  decided  to  set  up  a  new  reserve 
equal  to  the  old  reserve. 

252.  On  Dec.  31,  1917,  the  Profit  and  Loss  account 
of  a  corporation,  capitalized  for  $20,000,  showed  a  net 
profit  of  $2400.  (a)  It  was  decided  to  set  aside  $400 
as  a  reserve  for  bad  debts;  (b)  to  declare  a  dividend 
of  5%  ;  (c)  to  set  aside  the  remainder  as  a  surplus;  (d) 
to  pay  the  dividend  in  cash.  Make  the  necessary  Journal 
entries  of  the  above. 


Questions  in  Advanced  Bookkeeping  25 


January   1912 

For  questions  1-7  use  journal,  cashbook,  purchase  book  and 
sale.-,  book.  Two  ledgers  are  to  be  used :  main  ledger,  sales 
ledger. 

The  columns  required  in  the  journal  are  Accounts  Payable  Dr., 
General  Dr.,  Accounts  Receivable  Cr.  and  General  Cr. 

The  columns  required  in  the  cashbook  are  as  follows :  On  the 
debit  side,  Merchandise  Discount  Dr.,  Accounts  Receivable  Cr. 
and  General ;  on  the  credit  side,  Merchandise  Discount  Cr.,  Ac- 
counts Payable.  Dr.,  Expense  Dr.  and  General. 

In  the  opening  entry  assume  that  the  sales  ledger  balances  are 
entered  directly  from  the  schedules.  All  original  entries  must 
contain  sufficient  explanation  to  make  transactions  clear. 

1-7.  Make  the  necessary  entries  for  recording  by 
double  entry  bookkeeping  the   following  transactions : 

May  1,  1911,  C.  W.  Harkins,  wholesale  grocer,  has 
this  day  formed  a  partnership  with  T.  J.  Burke  to  carry 
on  the  same  business  in  Buffalo,  X.  Y.,  under  the  firm 
name  of  Harkins  &  Burke. 

Each  partner  is  to  invest  an  equal  amount  in  the  busi- 
ness. The  new  firm  is  to  assume  all  existing  liabilities 
for  C.  W.  Harkins.  Losses  and  gains  are  to  be  shared 
equally. 

C.  W.  Harkins  brings  into  the  business  the  following 
resources  and  liabilities  of  his  former  business: 

Cash  SI 2,960,  merchandise  $9,540.50,  furniture  and 
fixtures  $925,  expense  (insurance  prepaid)  $175,  accounts 
receivable  (per  schedule  A  below)  $2,376,  bills  payable 
(note  in  favor  of  S.  Barker,  dated  March  1,  at  three 
months,  with  interest  at  6%)  $1,300,  accrued  interest  to 
date  on  S.  Barker's  note  $13,  accounts  payable  (per 
schedule  B  below)  $1,966.50. 


26  Questions  in  Advanced  Bookkeeping 

Schedule  A  Accounts  receivable 

Gorham  &  Co.,  Albany,  N.  Y $  500. 

Richard  White,  Oswego,  N.  Y 1876. 

$2376. 

Schedule  B  Accounts  payable 

A.  Hoffman,  Troy,  N.   Y $1297. 

Arthur  Kelley,  Oswego,  N.  Y 669.50 

$1966.50 


T.  J.  Burke  invests  W.  Griffin's  note  for  $4,500  (dated 
March  25,  drawn  at  60  days,  with  interest  at  6%),  ac- 
crued interest  to  date  on  Griffin's  note  $27.75  and  cash 
necessary  to  equalize  his  partner's  interest  in  the  business. 

May  1.  Bought  of  Sales  Bros.  Rochester,  N.  Y.,  in- 
voice dated  May  1,  terms  5/10,  n/60:  15  bbl.,  4,500  lb.  B. 
sugar  @  3^ ;  25  bags,  3,125  lb.  R  coffee  @  25^. 

May  2.  Paid  cash  for  advertising  $85. 

May  3.  Sold  Thomas  Fleming,  city,  terms  2/5,  n/so: 
15  bx.,  600  lb.  codfish  @  9tf ;  20  bbl.,  1,000  gal.,  N.  O. 
molasses  @  30^. 

May  4.  Discounted  at  6%  W.  Griffin's  note  invested 
by  T.  J.  Burke,  and  received  credit  for  the  proceeds  at 
the  Marine  National  Bank. 

May  5.  Drew  sight  draft  for  $669.50  on  Richard 
White  as  per  agreement  and  remitted  it  to  Arthur  Kelley 
in  full  of  account. 

May  6.  Received  of  Harmon  &  Brown,  Buffalo,  N.  Y., 
invoice  of  this  date,  terms  2/5,  n/30 :  500  bbl.  T.  &  C. 
flour  @  $4.50. 

May  8.  Sold  to  D.  J.  Manning,  Albany,  N.  Y.,  terms 
2A>  %o :     25  bbl.  oatmeal  @  $6. 


Questions  in  Advanced  Bookkeeping  27 

,  May  8.  Received  of  Thomas  Fleming  a  certified  check 
for  invoice  of  May  3,  less  2%. 

May  9.  Sent  Sales  Bros,  a  New  York  draft  drawn  on 
the  First  National  Bank  of  X.  V.,  for  invoice  of  May  1, 
less  5%.  Bought  by  check  the  draft  at  Marine  National 
Bank,  exchange  75{. 

May  10.  Bought  of  William  Anderson,  Utica,  X.  Y., 
terms,  note  at  60  days  with  interest :  32  bbl.  sweet  pota- 
toes @  $2.25. 

May  11.  Sold  David  Nelson,  Rochester,  N.  Y.,  terms, 
on  account :     70  bx.  wool  soap  @  $3. 

May  11.  Paid  sight  draft  drawn  on  us  by  Harmon  & 
Brown  for  invoice  of  May  6,  less  2%. 

May  12.  Received  New  York  draft  from  D.  J.  Man- 
ning in  payment  of  invoice  of  May  8,  less  2%. 

May  13.  Gorham  &  Co.,  having  failed  in  business, 
settle  with  their  creditors  for  50  cents  on  the  dollar. 
Their  check  for  $250  is  received  and  accepted  in  full  set- 
tlement of  their  account. 

May  15.  Paid  two  weeks'  salaries  to  date  $350. 

Prepare  the  cashbook,  sales  book,  purchase  book  and 
journal  for  posting,  and  balance  the  cashbook. 

8.  Post  the  items  that  belong  to  the  sales  ledger  and 
rule  the  accounts  that  balance. 

9.  Open  the  Accounts  Receivable  account  in  main 
ledger,  make  the  necessary  postings  and  prove  the  bal- 
ance of  the  account  by  an  abstract  of  the  sales  ledger. 

10.  From  the  following  ledger  footings  and  inven- 
tories make  a  statement  of  losses  and  gains  as  of  May 
31,  1911: 


28  Questions  in  Advanced  Bookkeeping 

S.  Johnson   $22,400. 

Cash    $  4,920. 

Real  estate   9,000. 

Merchandise   purchases    30,000. 

Merchandise  sales    35,000. 

Interest  and  discount 40. 

Merchandise  discount   50. 

Insurance    225. 

General  expense   3,235. 

Bills  receivable   9,550. 

Accounts    receivable    2,050. 

Accounts  payable 1,570. 


$59,020.        $59,020. 


Inventories:  real  estate  $9,500;  merchandise  $5,000. 

11.  Write  the  check  and  the  draft  mentioned  in  the 
transaction  of  May  9,  supplying  any  necessary  facts. 

12.  John  Blake  began  business  on  Jan.  2,  1911,  with 
resources  $9,000  and  liabilities  $4,000.  On  Dec.  30,  1911, 
he  finds  that  his  resources  are  $6,000  and  his  liabilities 
$8,000.  Open  his  account  in  accordance  with  the  facts 
as  stated  and  show  his  net  loss.  Close  the  account  and 
show  his  net  insolvency  Jan.  1,  1912. 

Find  at  what  per  cent  on  the  dollar  Blake  can  pay  his 
liabilities. 

13.  A  draft  for  $975  was  drawn  Sept.  1,  1910,  at  two 
months'  sight  by  Ryan  &  Myers  on  James  Vincent,  in 
favor  of  Charles  Tracey,  and  was  accepted  on  the  same 
date.  Charles  Tracey  transferred  it  in  payment  of  a  debt 
to  S.  Stafford,  Oct.  4,  less  discount  at  6%,  for  unexpired 
time. 

(a)  Write  the  draft  showing  the  acceptance  and  in- 
dorsement at  time  of  transfer,  (b)  Make  the  journal 
entry  for  S.  Stafford. 


Questions  in  Advanced  Bookkeeping  29 

June  1912 

For  questions  1-7  use  journal,  cashbook,  purchase  book  and 
sales  book.  The  columns  required  in  the  journal  are  Accounts 
Payable  Dr.,  General  Dr.,  Accounts  Receivable  Cr.  and  General 
Cr.  The  columns  required  in  the  cashbook  are  as  follows :  On 
the  debit  side,  Discount  on  Sales  Dr.,  Accounts  Receivable  Cr. 
and  General ;  on  the  credit  side,  Discount  on  Purchases  Cr., 
Accounts  Payable  Dr.  and  General.  All  original  entries  must 
contain  sufficient  explanation  to  make  transactions  clear. 

1-7.  On  Jan.  1,  1912,  Henry  Fairley  and  Francis  King 
trading  as  Henry  Fairley  &  Co.,  wholesale  dry  goods 
merchants,  New  York  city,  dissolve  partnership  by  mu- 
tual agreement.  By  the  terms  of  the  agreement  Mr. 
Fairley,  who  will  continue  the  business  in  his  own  name, 
takes  over  all  the  assets  of  the  firm  and  assumes  the 
liabilities.  Mr.  King  agrees  to  take  a  six-months  note 
for  his  share  of  the  partnership  settlement.  The  balance 
of  the  general  ledger  accounts  are  accepted  as  the  basis 
for  the  settlement.  They  are  as  follows :  Cash  $4,- 
410.90,  merchandise  $14,928.62,  furniture  and  fixtures 
$1,682,  accounts  receivable  (per  schedule  A  below) 
$5,897.56,  bills  receivable  (per  schedule  B  below)  $3,842, 
accounts  payable  (per  schedule  C  below)  $3,671.40,  bills 
payable  (per  schedule  D  below)  $12,000,  accrued  interest 
on  bills  payable  $22.22,  Henry  Fairley  $7,533.73,  Francis 
King  $7,333.73. 

Schedule  A  Accounts  receivable 

William  A.  White,  Toledo.  Ohio $  2.486.50 

Scranton  Dry  Goods  Co.,  Scranton,  Pa 1,540.26 

James  Young,  Ithaca,   X.  V 1.870.80 

$  5.897.56 


30  Questions  in  Advanced  Bookkeeping 

Schedule  B  Bills  receivable 

William  A.   White's  note  at  60  days,   dated 

Nov.   4,    1911 $1,800. 

The  Allison  Co.'s  draft  at  90  days'  sight,  ac- 
cepted Dec.  4,  1911 2,042. 

$  3,842. 


Schedule  C  Accounts  payable 

G.  B.  Anderson  &  Son,  New  York $  2,500. 

The  Tipton  Manufacturing  Co.,   Manchester, 

Eng 1,171.40 

$  3,671.40 


Schedule  D  Bills  payable 

Note  in  favor  of  Colonial  National  Bank, 
dated  Dec.  15,  1911,  on  demand,  with 
interest   at    5% $10,000. 

Note  in  favor  of  G.  B.  Anderson  &  Son,  dated 

Nov.  13,  1911,  at  two  months 2,000. 


$12,000. 


Jan.  2.  Mr.  Fairley  received  a  bill  of  sale  for  Mr. 
King's  share  and  executed  a  note  in  Mr.  King's  favor 
according  to  the  agreement. 

As  bookkeeper  for  Mr.  Fairley,  make  the  journal  entry 
necessary  to  show  the  assets  and  liabilities,  including  the 
note  issued  to  Mr.  King,  with  which  he  begins  business. 
(A  new  set  of  books  is  used.) 

Jan.  3.  Received  from  William  A.  White  check  for 
$1,800  in  payment  of  his  note  due  to-day. 

Jan.  4.  Received  an  invoice  of  goods  from  Eaton, 
Marsh  &  Co.,  Boston,  Mass.,  terms  8/5,  n/30:     35  pc, 


Questions  in  Advanced  Bookkeeping  31 

1,610  yd.  Scotch  cheviot  @  45^  ;  28  pc,  816]^  yd.  fancy 
cashmere  @  $1.35. 

Jan.  6.  Sold  E.  H.  Peterson,  Johnstown,  X.  Y.,  terms, 
sight  draft  in  10  days:  5  pc,  181  yd.  X  velvet  @  $1.85. 
25  gross  C  buttons  @  $3.25. 

Jan.  8.  Received  James  Young's  check  for  balance  of 
account  due. 

Jan.  9.  Remitted  to  Eaton,  Marsh  &  Co.  a  check  in 
payment  of  invoice  of  Jan.  4,  less  discount. 

Jan.  11.  Mr.  Fairley  makes  an  additional  investment 
of  $6,000  cash. 

Jan.  13.  Remitted  to  G.  B.  Anderson  &  Son  a  check 
in  payment  of  note  due  to-day. 

Jan.  13.  Bought  of  Smith  &  Mason,  New  York,  and 
issued  a  30-day  note  in  payment:  150  pc.  black  ribbon 
@  $3.65. 

Jan.  16.  Drew  sight  draft  on  E.  H.  Peterson  for  bill 
of  Jan.  6  and  received  credit  for  the  same  at  the  bank. 

Jan.  18.  Discounted  the  Allison  Co.'s  draft  at  Colonial 
National  Bank  and  received  credit  for  the  proceeds. 

Jan.  19.  Paid  Mr.  King  $2,533.73  by  check  in  part 
payment  of  note  in  his  favor. 

Jan.  22.  Sold  Scranton  Dry  Goods  Co.  on  account :  5 
pc,  186  yd.  Scotch  cheviot  @  62  y2c. 

Jan.  25.  William  A.  White  settled  for  balance  due  on 
account  $2,486.50,  less  2%,  by  his  60-day  note  for  $1,000 
and  his  check  for  the  balance. 

Jan.  29.  Returned  to  G.  B.  Anderson  &  Son  a  small 
lot  of  damaged  goods  invoiced  at  $38.72. 

Jan.  31.  Paid  by  check  interest  to  date  on  note  in  favor 
of  Colonial  Xational  Bank. 

Jan.  31.  Paid  miscellaneous  expense  items,  total 
$296.50. 


32  Questions  in  Advanced  Bookkeeping 

Prepare  the  cashbook,  sales  book,  purchase  book  and 
journal  for  posting  and  balance  the  cashbook.  (The 
mere  footing  of  columns  is  not  sufficient.) 

8.  Henry  Garland  began  a  retail  business  on  March 
1,  1912,  with  a  capital  consisting  of  merchandise  $4,500, 
cash  on  hand  $570  and  accounts  receivable  $3,200.  On 
May  31,  1912,  his  assets  and  liabilities  consisted  of  cash 
$1,610.75,  bills  receivable  $945,  accounts  receivable 
$2,291.60,  merchandise  $6,847.50,  accounts  payable  $2,- 
400.     During  the  three  months  he  had  withdrawn  $500. 

Prepare  a  statement  showing  the  profit  or  loss  for  the 
three  months  ending  May  31,  1912. 

9.  Write  the  check  and  the  note  referred  to  under 
date  of  Jan.  25,  supplying  any  necessary  facts. 

10.  Explain  the  purpose  for  which  each  of  the  follow- 
ing ledger  accounts  is  used:  (a)  capital  stock,  (b)  de- 
preciation,  (c)   suspense,   (d)  goodwill. 

11.  The  American  Machinery  Co.  is  incorporated  with 
a  capital  stock  of  $200,000.  William  Conway,  Isaac 
Marshall  and  Henry  Fielding  each  subscribe  for  $50,000 
worth  of  stock  at  par  and  paid  cash.  The  unsubscribed 
stock  is  to  be  offered  for  sale  when  additional  capital  is 
needed.  Make  the  necessary  opening  entries  on  the 
books  of  the  corporation. 

12.  (a)  Explain  the  use  of  a  controlling  account, 
(b)  Mention  tzvo  important  advantages  gained  from  the 
use  of  controlling  accounts. 

January  1913 

Charles  Williams  and  Henry  Groves,  as  equal  partners, 
have  been  conducting  a  wholesale  dry  goods  busine-s  at 
286  Shepard  St.,  Utica,  N.  Y.     They  have  decided  to  in- 


Questions  in  Advanced  Bookkeeping  33 

corporate  and  to  secure  additional  capital  by  the  sale  of 
stock.  The  necessary  legal  steps  have  been  taken  and  a 
charter  has  been  granted. 

The  capital  stock  of  the  new  firm,  which  is  to  be  known 
as  the  Utica  Wholesale  Dry  Goods  Company,  is  $60,000, 
divided  into  600  shares  of  the  par  value  of  $100  each. 
Each  partner  is  to  receive  $25,000  of  the  capital  stock  for 
his  share  of  the  old  business. 

The  condition  of  the  business  on  Dec.  31,  1912,  is 
shown  by  the  following  schedule  of  assets  and  liabilities : 

ASSETS 

Cash  on  hand $  6,000. 

Merchandise    per    inventory 22,500. 

Accounts   receivable    5,298.22 

James  Rogers,  Amsterdam $  2,460. 

Henry  Paine,   Olean 1,456.60 

George  Rice,  Cortland 954.87 

J.  D.   Carson,  Oswego •      42675 

Bills  receivable   2,810. 

3-months'    note    signed    by    J.    B. 

Miller  &  Co.,  due  Mar.  1,  1913.  .$  1,250. 
90-day  note,  F.  B.  Wolfe,  maker, 
due  Feb.  10,  1913 1,560. 

Expense   (unused  coal,  etc. ) 239. 

Furniture   1,800. 

Real  estate   7,500. 

Delivery   Equipment    800. 

Insurance   (unearned  premium) 225. 

LIABILITIES 

Accounts  payable   $  1,792.50 

United  States  Woolen  Co $   742.50 

Excelsior    Mills    Co 1,050. 

Bills  payable 

60-day  note  in  favor  of  II.  C.   Morris  due 
Mar.    15,    1913 2,400. 


34  Questions  in  Advanced  Bookkeeping 

1.  Make  journal  entry  necessary  to  close  the  old  books 
on  Dec.  31,  1912,  assuming  that  the  partners'  accounts 
stand  credited  with  their  present  worth.  All  notes  are 
to  be  considered  at  face  value.  A  general  ledger,  sales 
ledger  and  purchase  ledger  were  kept  but  only  the  general 
ledger  accounts  are  to  be  closed. 

2.  Make  journal  entries  necessary  to  open  the  new 
books  on  Jan.  1,  1913,  assuming  that  no  new  stock  has 
yet  been  sold.  The  entire  capital  stock  is  to  appear  on 
the  books. 

3.  (a)  On  Jan.  10,  1913,  S.  C.  Jamieson  subscribed 
for  50  shares  of  the  treasury  stock  at  par.  Make  proper 
entry,  (b)  On  Jan.  15,  1913,  S.  C.  Jamieson  paid  for 
his  stock  in  cash.     Make  journal  entry. 

4.  (a)  At  the  end  of  the  first  year  of  business  the 
Profit  and  Loss  account  shows  a  net  profit  of  $9,000. 
The  directors  decide  to  pay  a  dividend  of  10%,  set  apart 
$1,000  as  a  reserve  for  doubtful  accounts  and  let  the  bal- 
ance stand  as  a  surplus.  Make  the  proper  journal  entry, 
(b)  The  treasurer  has  been  directed  to  pay  the  dividend 
in  cash.     Make  the  proper  journal  entry. 

5.  (a)  The  General  Commission  Co.,  Rochester,  N. 
Y.,  has  received  from  George  Wilson  &  Co.,  Medina, 
N.  Y.,  500  baskets  of  peaches  to  sell  on  10%  commission. 
The  following  charges  were  paid  in  cash  by  the  Commis- 
sion Co. :  Freight,  $14.60;  cartage,  $5  ;  insurance,  $2.50. 
Make  the  proper  journal  entry  for  the  Commission  Co. 
(b)  The  peaches  have  been  sold  for  cash  at  50^  a  basket. 
Make  an  account  sales  and  the  proper  entry  for  the  Com- 
mission Co.,  assuming  that  settlement  has  been  made  by 
check. 

6.  (a)  The  Southern  Produce  Co.  of  Jacksonville, 
Fla.,  has  shipped  a  carload  of  melons  to  The  General 


Questions  in  Advanced  Bookkeeping  35 

Commission  Co.  of  Rochester,  N.  Y.,  to  be  sold  on  12>4% 
commission.  The  melons  cost  the  Southern  Produce  Co., 
$350 ;  freight  from  growers,  $89.50 ;  insurance  and  stor- 
age, $24.30 ;  cartage,  $4.20.  All  of  these  payments  were 
made  in  cash  on  the  day  of  shipment.  Make  the  proper 
journal  entry  for  the  Produce  Co.  (b)  An  account  sales 
has  been  received  by  the  Southern  Produce  Co.  showing 
the  following  results  from  the  shipment:  Total  sales, 
$790 ;  payments  for  freight,  $62 ;  for  insurance  and  stor- 
age, $20:  for  cartage,  $5.50;  and  a  charge  for  commis- 
sion at  the  rate  given.  Assuming  that  a  check  in  full 
settlement  is  received  with  account  sales,  make  the  proper 
journal  entry. 

7.  At  the  close  of  business  Dec.  31,  1912,  the  inven- 
tories and  single  entry  records  of  the  Jones  Manufactur- 
ing Co.  revealed  the  following  condition : 

ASSETS 

Cash   $  2,380. 

Unfinished  goods   12,570. 

Finished  goods   4,600. 

Bills  receivable   1,500. 

Accounts   receivable    15,420. 

George   Roe   $  5,220. 

Henry  Smith   4,640. 

Charles  May   5,560. 

Plant    50,000. 

Machinery   and    tools 12,680. 

Office  fixtures   1,200. 

Materials  and  supplies 10,382. 

Expense   (items  unused) 560. 

LIABILITIES 
Accounts  payable   $15,645. 

Hill  &  Co $  9,840. 

Gray    Manufacturing    Co 5,805. 

Bills  payable   1,120. 


36  Questions  in  Advanced  Bookkeeping 

The  firm  desires  to  open  new  double  entry  books. 
Make  the  necessary  journal  entry. 

8.  Henry  Taylor  sold  to  James  Wilson  merchandise 
amounting  to  $6,842.00,  and  received  in  payment  his  own 
acceptance  due  to-day,  in  favor  of  Richard  Wallace, 
$3,840,  cash  $1,000  and  a  sight  draft  on  Henry  Mills  for 
the  balance.  Taylor  handed  the  sight  draft  to  Henry 
Mills  and  received  credit.  Make  the  proper  journal 
entry. 

9.  The  debit  side  of  your  columnar  cashbook  shows 
the  following  footings : 

Merchandise  Discount   $     136.18 

Accounts  Receivable  2,734.20 

Merchandise   937.21 

General    18,945.10 

The  credit  side  of  your  cashbook  shows  the  following 
footings : 

Merchandise  Discount   $      147.19 

Accounts    Payable    4,387.62 

Expense   261.17 

General    3,620.13 

Only  iterfis  for  which  there  were  no  special  columns 
were  entered  in  the  general  columns.  Transfer  the  above 
data  to  your  paper  and  close  the  cashbook,  indicating  the 
postings  that  must  be  made. 

10.  In  a  set  of  books  the  general,  sales  and  purchase 
ledgers  were  kept.  Explain  fully  the  posting  from  (a) 
the  sales  book,  (b)  the  purchase  book. 

11.  What  is  an  abstract  of  the  sales  ledger?  What 
does  it  prove? 

12.  (a)  Henry  Pitkin  who  owes  you  $1,000  has  been 
discharged  in  bankruptcy  and  you  receive  a  check  for  $400 


Questions  IN  Advanced  Bookkeeping  37 

in  full  settlement  of  your  account.  Make  the  journal 
entry,  (b)  A  year  later  Henry  Pitkin  writes  you  that 
he  expects  to  pay  in  time  all  his  old  debts  and  incloses  a 
check  for  $300  in  part  payment  of  the  balance  due  you. 
Make  the  journal  entry. 


June  1913 

All  original  entries  must  contain  sufficient  explanation  to  make 
transactions  clear.  Such  entries  as  are  required  in  questions  8, 
10  and  11  may  be  made  more  conveniently  in  journal  form. 

For  questions  1-4  use  a  cashbook  with  columns  provided  as 
follows :  On  the  debit  side,  Discount  on  Sales  Dr.,  Sales  Ledger 
Cr.,  Bills  Receivable  Cr.,  Interest  and  Discount  Dr.,  and  General; 
on  the  credit  side,  Discount  on  Purchases  Cr.,  Purchase  Ledger 
Dr.  and  General.  The  General  columns  may  be  used  as  Net 
Cash  columns  and  a  Balance  column  may  also  be  provided. 

1_4.  On  May  1,  1913,  the  cashbook  of  William  Har- 
mer,  dealer  in  electric  supplies,  Elmira,  N.  Y.,  showed  a 
balance  of  $1,512.60.  Enter  this  balance  in  the  cashbook 
and  record  with  explanations  the  following  transactions: 

May  2.  Received  John  King's  check  for  $400  balance 
of  account  due  May  1. 

May  3.  Paid  freight  bill  for  month  of  April  $46.40. 
•May  5.  Discounted  Henry  Dake's  60-day  note  at  City 
National  Bank  and  received  credit  for  the  proceeds ;  date 
of  note  April  15,  face,  $1,450. 

May  6.  Paid  Western  Supply  Co.'s  invoice  of  April 
21  for  $1,620,  less  2%  discount. 

May  7.  Received  George  Walsh's  check  for  bill  of 
April  30,  $362.10,  less  3%  discount. 

May  8.  James  Larson  paid  by  check  his  acceptance 
for  $750  due  to-day. 


38  Questions  in  Advanced  Bookkeeping 

May  10.  Miscellaneous  cash  sales  were  made  amount- 
ing to  $18.50. 

May  12.  Drew  on  Charles  Larkin  at  sight  for  $246.25, 
balance  due  on  account,  and  received  credit  for  the  draft 
at  City  National  Bank. 

May  13.  Demanded  payment  of  Johnson  &  Armstrong 
for  their  interest-bearing  note  due  to-day  and  received 
a  check  in  full  settlement,  face  and  interest ;  face  of  note 
$550,  date  of  note  Feb.  13,  1913. 

May  14.  Remitted  to  Western  Supply  Co.  a  New  York 
draft  for  $600  to  apply  on  account.  The  draft  was  pur- 
chased at  City  National  Bank,  exchange  at  par. 

Close  the  cashbook  properly  and  bring  down  the  bal- 
ance. Indicate  clearly  the  postings  necessary  for  the 
totals  of  the  special  columns. 

5-6.  For  the  month  ending  May  31,  1913,  the  ledger 
of  John  L.  Marcy,  wholesale  merchant,  shows  the  follow- 
ing balances  for  the  trading  and  profit  and  loss  accounts : 

Sales    $8,746.40 

Returned   sales    $     83.25 

Discount   on   sales 174.18 

Purchases    2,876.43 

Returned  purchases 100.12 

Freight  on  goods  purchased 46.25 

Discounts  on  purchases 113.82 

Merchandise   inventory,  April   30, 

1913  9,467.18 

Sales  expense  account 267.50 

Administrative  expense  account. .  273.50 

General  expense  account 76.42 

Interest  and  discount 8.95 

Insurance    12.00 

On  May  31,  1913,  the  merchandise  on  hand  is  inven- 
toried at  $5,827.63. 


Questions  in  Advanced  Bookkeeping  39 

Using  the  above  accounts  and  merchandise  inventory, 
prepare  a  trading  and  profit  and  loss  statement  that  will 
show  (a)  net  sales,  (b)  cost  of  merchandise  sold.  Cc) 
gross  trading  profit,  (d)  net  profit  of  the  business  for  the 
month. 

7.  On  January  7  you  received  from  J.  R.  Milton  & 
Co.,  Lockport,  X.  Y.,  100  bbl.  apples  to  be  sold  on  their 
account  at  5%  commission.  The  apples  were  sold  as  fol- 
lows :  20  bbl.  at  $3.50  a  bbl ;  35  bbl.  at  $3.7?  ;  30  bbl.  at 
$4;  15  bbl.  at  $3.80.  Payments  were  made  for  freight 
$16.25,  for  storage  $15.50,  for  cartage  $11.50.  On  Janu- 
ary 31  proceeds  were  remitted  by  10-day  sight  draft  on 
William  Harvey,  Rochester,  X.  Y.  Prepare  an  account 
sales  and  write  the  draft  to  accompany  same. 

8.  The  Royal  Furniture  Co.  is  incorporated  with  a 
capital  stock  of  $50,000,  shares  $100  each,  for  the  pur- 
pose of  taking  over  the  business  of  W.  M.  Thompson, 
furniture  manufacturer  at  Buffalo.  On  April  1,  1913, 
Thompson  transfers  his  business  to  the  company  for  300 
shares  of  stock  at  par,  his  balance  sheet  of  March  31 
with  total  resources  $36,782.25  and  total  liabilities  $9,- 
675.75  being  taken  as  the  basis  for  the  transfer.  J.  K. 
Peters,  George  Clark  and  Henry  Coates  have  each  sub- 
scribed for  30  shares  and  pay  cash  on  April  1  for  the 
stock  subscribed.  Assuming  that  the  corporation  is  to 
continue  the  use  of  Thompson's  books,  make  the  neces- 
sary entries. 

9.  (a)  Explain  the  advantage  of  depositing  in  the 
bank  all  cash  receipts  and  making  payments  entirely  by 
check,  (b)  With  such  a  plan  in  force,  explain  the  pro- 
vision that  should  be  made  for  the  payment  of  the  petty 
expenses  of  a  business. 


4o  Questions  in  Advanced  Bookkeeping 

10.  Record  in  journal  form,  with  sufficient  explana- 
tion, the  entries  for  the  following : 

(a)  Ten  days  ago  an  invoice  of  goods  amounting  to 
$1,532.80  was  bought,  on  terms  1%  discount  in  10  days, 
from  the  Naples  Manufacturing  Co.  and  was  regularly 
entered  at  the  time  of  pui chase.  Settlement  is  made  to- 
day for  the  amount  of  the  invoice  with  allowance  for 
damaged  goods  $10.45  and  for  the  discount.  James 
Warren's  note  for  $563.50,  on  which  32  days'  interest  has 
accrued,  is  transferred  in  part  payment  and  a  check  is 
given  for  the  balance,  (b)  A  note  for  $237.50,  due 
June  5,  in  favor  of  Johnson  &  Gray,  was  paid  at  maturity. 
The  bookkeeper  charged  Johnson  &  Gray  at  the  time  and 
the  entry  was  so  posted.  The  error  is  discovered  to-day. 
Make  the  correction  entry,  assuming  that  a  purchase 
ledger  is  used  in  the  business,  (c)  Office  salaries,  $160, 
and  office  expenses,  $40,  were  charged  to  General  Ex- 
penses, contrary  to  instructions  that  separate  accounts 
were  to  be  used.     Make  the  adjusting  entry. 

11.  Make  the  proper  entries  for  your  part  of  the 
transaction  referred  to  in  question  7. 

12.  In  the  sales  department  of  a  manufacturing  con- 
cern a  system  is  in  use  whereby  bills  are  made  in  tripli- 
cate and  a  record  is  kept  of  the  sales  in  a  sales  journal 
or  register.  Explain  (a)  the  advantages  of  such  a  sys- 
tem, (b)  the  method  of  posting. 

13.  How  does  a  merchant  whose  books  are  kept  by 
single  entry  ascertain  at  the  end  of  the  year  the  net  gain 
on  merchandise,  the  total  expenses  for  the  year  and  the 
net  gain  of  his  business? 

14.  Explain  (a)  current  assets,  (b)  fixed  assets,  (c) 
voucher,  (d)  administrative  expense,  (e)  accommoda- 
tion note. 


Questions  in  Advanced  Bookkeeping  41 

January   1914 

For  questions  1-6  use  journal,  cashbook,  sales  book  and  pur- 
chase book.  The  special  columns  required  in  the  journal  are 
Accounts  Payable  Dr.  and  Accounts  Receivable  Cr.  The 
special  columns  required  in  the  cashbook  are  as  follows :  On 
the  debit  side,  Discount  on  Sales,  Accounts  Receivable  and  Sales ; 
on  the  credit  side,  Discounts  on  Purchases,  Accounts  Payable 
and  Expense.  All  original  entries  must  contain  sufficient  ex- 
planation to  make  transactions  clear. 

1-6.  On  Dec.  1,  1913,  the  cashbook  of  The  Wilson 
Furniture  Co.,  Brooklyn  X.  Y.,  showed  a  balance  of 
$11,675.25.  Enter  this  balance  in  the  cashbook  and 
make,  with  proper  explanation,  the  necessary  entries  for 
the  following  transactions : 

Dec.  2.  Received  from  John  Williams,  Grand  Rapids, 
Mich.,  invoice  of  furniture  amounting  to  $1,200;  date  of 
invoice,  Nov.  29;  terms  of  invoice,  5/10,  2/:{0>  n/oo- 

Dec.  3.  Sold  Brown  &  Potter,  City,  terms  y2  cash, 
balance  90-day  note:  10  three  piece  parlor  sets  @  $40; 
10  dining  tables  @  $18.  Received  their  check  and  note, 
both  dated  to-day,  in  payment  of  bill  rendered. 

Paid  freight  on  invoice  from  John  Williams  in  cash, 
$45. 

Cash  sales  for  the  day,  $240. 

Dec.  4.  E.  A.  Dorman  dishonored  his  two  months' 
note  for  $600,  dated  Oct.  4,  which  we  had  discounted  at 
our  bank.  Our  bank  notified  us  that  the  note  and  protest 
fees  $1.50  were  charged  to  our  account. 

Dec.  5.  Received  from  E.  A.  Dorman  a  new  interest- 
bearing  60-day  note  for  the  amount  of  the  dishonored 
note  and  protest  fees. 

Dec.   6.  Returned   to   John   Williams,    Grand   Rapids, 


42  Questions  in  Advanced  Bookkeeping 

Mich.,  two  sideboards  @  $15  and  one  dresser  $16  from 
invoice  of  Nov.  29.  These  pieces  were  not  the  style 
ordered. 

Dec.  8.  Sold  Riley  &  Cohen,  Trenton,  N.  J.,  terms, 
bill  of  lading  with  sight  draft  attached:  one  parlor  set 
$85 ;  one  dining  room  set  $45 ;  three  bedroom  sets  @  $40. 
The  prices  were  subject  to  a  trade  discount  of  5%. 

Dec.  9.  Remitted  to  John  Williams  a  draft  on  Ninth 
National  Bank,  Chicago,  111.,  purchased  by  check  at 
School  National  Bank,  Brooklyn,  N.  Y.,  in  payment  of 
invoice  of  Nov.  29,  less  the  discount.  (Note  that  some 
of  the  goods  were  returned  on  Dec.  6.) 

Dec.  12.  Received  notice  from  our  bank  that  the  sight 
draft  drawn  on  Riley  &  Cohen  in  payment  of  bill  of  Dec. 
8  has  been  collected  and  placed  to  our  credit ;  collection 

charges  %%. 

Dec.  15.  Received  from  S.  L.  Boyd  &  Co.,  City,  check 
in  payment  of  bill  of  furniture  purchased  Nov.  24; 
amount  of  bill,  $540,  terms,  3/10,  2/30,  Veo- 

Dec.  18.  Discounted  Brown  &  Potter's  90-day  note  of 
Dec.  3  and  received  credit  for  the  proceeds. 

Dec.  19.  Paid  cash  for  the  following  items:  Insur- 
ance on  stock,  $240;  office  salaries,  $36;  office  supplies, 
$15;  janitor  service,  $5. 

Dec.  24.  Cash  sales  for  the  day,  $190. 

Dec.  27.  Bought  of  O.  D.  Feldman  for  $18,000  the 
store  and  lot  we  now  occupy  and  made  settlement  as 
follows:  paid  cash  $5,000  and  gave  a  mortgage  for  the 
balance. 

Dec.  31.  Cash  sales  for  the  day,  $210. 

Prepare  the  cashbook,  sales  book,  purchase  book  and 
journal  <"or  posting  and  balance  the  cashbook. 

Do  not  post  but  indicate  clearly  the  postings  necessary. 


Questions  in  Advanced  Bookkeeping  43 

7-8.  On  Dec.  31,  1913,  the  general  ledger  of  Henry 
Watkins,  wholesale  merchant,  shows  the  following  trial 
balance : 

Henry    Watkins.   proprietor $  50,000. 

Cash   $    9,165.20 

Notes    receivable    12,450.40 

Accounts   receivable    36,678.12 

Merchandise    inventory,    Jan. 

1,  1913  18,572.50 

Notes  payable   11.480.96 

Accounts    payable    10.930.80 

Purchases    95,349.23 

Discounts  on  purchases 2.084.o0 

Sales   115,136. 

Discounts   on   sales 3,560. 

Insurance    560. 

Rent    6,000. 

Interest  and  discount 561.80 

Collection  and  exchange 116.40 

General  expense   5,636.61 

Furniture  and  fixtures 982. 

$189,632.26       $189,632.26 


The  inventories  on  Dec.  31,  1913,  are  as  follows:  mer- 
chandise $21,650;  furniture  and  fixtures  10fc  less  than 
ledger  value ;  interest  accrued  on  notes  receivable  $126.50. 

Prepare  a  statement  of  losses  and  gains  for  the  year 
ending  Dec.  31,  1913.  that  will  show  (a)  the  gain  on  mer- 
chandise, (b)  the  net  gain  for  the  year. 

9.  Tohn  Allen  and  George  Bacon  formed  a  partner- 
ship on  Jan.  2,  1913.  The  agreement  provided  that  Allen 
was  to  receive  three-fourth  of  the  net  profits  and  Bacon 
one-fourth  of  the  net  profits. 

Allen  invested  $4,287.46  and   Bacon  invested  $1,050. 


44  Questions  in  Advanced  Bookkeeping 

During  the  year  Allen  withdrew  $1,500,  and  Bacon  with- 
drew $700.  At  the  close  of  the  year  the  total  assets  of 
the  firm  were  $7,564,  and  the  total  liabilities  were  $3,- 
452.50.  Find  the  interest  of  each  partner  in  the  firm  at 
the  close  of  the  year.  No  particular  form  of  statement 
is  required  but  all  work  must  be  shown. 

10.  On  Jan.  10,  1914,  John  Lyman  and  Davis  Norman 
became  partners  to  carry  on  the  retail  hardware  business. 
Lyman  invested  cash,  $1,000;  merchandise,  $4,000;  notes 
receivable,  $1,200;  store  and' lot  valued  at  $11,000  and 
mortgaged  for  $9,000.  The  new  firm  assumed  the  mort- 
gage on  the  store  and  lot  invested  by  Lyman  and  also  a 
60-day  note  for  $800,  dated  Dec.  15,  1913,  which  Aaron 
Dolan  held  against  Norman.  Norman  invested  cash 
to  make  his  net  investment  equal  to  Lyman's. 

Make  the  opening  entries  for  the  new  firm.   x 

11.  Explain  four  of  the  following  terms:  (a)  good- 
will, (b)  current  liability,  (c)  fixed  asset,  (d)  capital 
stock,  (e)  surplus  account,  (f)  shipment  account,  (g) 
account  purchase. 

12.  (a)  What  is  a  voucher  check  and  how  is  it  used? 
(b)  What  records  should  a  petty  cashbook  contain? 
What  advantage  results  from  the  use  of  the  petty  cash- 
book? 

13.  On  Oct.  10,  1913,  William  Johns,  a  commission 
merchant,  16  Washington  street,  New  York  City,  re- 
ceived from  Fred  Mott,  Watertown,  N.  Y.,  4,000  bu. 
potatoes  to  be  sold  on  commission.  On  the  same  date 
Johns  paid  freight  $230,  cartage  $42  and  advanced  to 
Mott  cash  $500.  On  Oct.  28  Johns  sold  for  cash  the 
potatoes  at  5Sff  a  bushel,  and  rendered  an  account  sales, 
inclosing  a   check   for  the   amount  due,   charges   being 


Questions  in  Advanced  Bookkeeping  45 

made  for  storage  $40  and  for  commission  3%.  (a)  As 
bookkeeper  for  William  Johns,  make  the  necessary  entries 
for  the  transactions  given  above,  (b)  Prepare  the  ac- 
count sales  rendered  by  Johns. 


June  1914 

For  questions  1—6  use  journal,  cashbook,  sales  book  and  pur- 
chase book.  The  special  columns  required  in  the  journal  are 
Accounts  Payable,  Dr.  and  Accounts  Received,  Cr.  The  spe- 
cial columns  required  in  the  cash  book  are  as  follows :  on  the 
debit  side,  Discount  on  Sales,  Accounts  Received  and  Sales;  on 
the  credit  side,  Discount  on  Purchases,  Accounts  Payable,  and 
Expense.  All  original  entries  must  contain  sufficient  explana- 
tion to  make  transactions  clear. 

1-6.  The  Crawford  Heating  Co.,  incorporated,  is  en- 
gaged in  business  at  Syracuse,  N.  Y.  On  April  1,  1914, 
the  cashbook  showed  a  balance  of  $4,682.50. 

Enter  this  balance  in  the  cashbook  and  make,  with 
proper  explanations,  the  necessary  entries  for  the  follow- 
ing transactions.  (The  transactions  do  not  constitute  a 
complete   series)  : 

April  6.  Received  from  the  Acorn  Stove  Co.,  Canton, 
Ohio,  invoice  of  stoves  amounting  to  $485;  date  of  in- 
voice April  3 ;  terms  3/10,  l/30,  D/fi0. 

April  8.  Paid  invoices  by  check  as  follows :  books  and 
stationery,  Case  Office  Supply  Co.,  $27.60;  coal  for  ware- 
house and  office  use,  Economy  Coal  Co.,  ^325  ;  freight 
bills  on  incoming  merchandise,  Xew  York  Rapid  Freight 
Co.,  $65.30. 

April  13.  Paid  by  check  invoice  of  April  3. 

April   15.  Sold   Farmers'   Cooperative   Association   of 


46  Questions  in  Advanced  Bookkeeping 

Monroe,  N.  Y.,  10  heating  stoves  at  $32  each,  taking  in 
part  payment  5  secondhand  stoves  at  $10  each  and  the 
balance  in  cash. 

April  18.  Petty  cash  sales  to  transient  buyers  to  date, 

$164.20. 

April  20.  Received  a  letter  from  Henry  Watson  of 
Goshen,  N.  Y.,  stating  that  three  stoves  recently  sold  him 
on  terms,  3/10,  1/30  were  received  in  a  damaged  condi- 
tion ;  he  offers  to  return  them  or  to  keep  them  at  a  reduc- 
tion of  20%  from  the  invoice  price  which  was  $138.  Ac- 
cepted his  20%  proposition.  (Entry  had  been  made  for 
the  sale  when  goods  were  shipped.) 

April  24.  Received  from  H.  B.  Stevens  his  60-day 
note,  dated  April  20,  in  full  settlement  of  his  account  of 
$650.  Discounted  this  note  at  Third  National  Bank  and 
received  credit  for  the  proceeds. 

April  28.  Received  a  letter  from  Brown  Bros.  &  Co., 
of  Schenectady,  N.  Y.,  stating  that  their  bookkeeper  over- 
charged us  $21.50  on  our  invoice  and  inclosing  a  credit 
memorandum  for  that  amount.  Our  entry  for  the  pur- 
chase had  already  been  made. 

April  30.  Received  check  of  Henry  Watson  for  bal- 
ance of  invoice  referred  to  in  transaction  of  April  20, 
less  3%  discount. 

May  1.  Purchased  from  J.  B.  Bates  &  Co.,  Geneva, 
N.  Y.,  terms,  yi0,  n/30,  invoice  of  goods  amounting  to 
$286.50. 

May  2.  Drew  at  30-days  sight  in  our  own  favor  on 
Milford  Manufacturing  Co.,  Troy,  N.  Y.,  for  $636,  the 
amount  of  an  invoice  shipped  them  March  27.  Mailed 
draft  to  them  for  acceptance. 

May  4.  Received  a  notice  from  Lincoln  National  Bank 
that  our  60-day  note  for  $520,  in  favor  of  the  Sterling 


Questions  in  Advanced  Bookkeeping  47 

Heater  Co.,  Buffalo,  N.  Y.,  which  had  been  left  with  the 
bank  for  collection,  is  due  today.  Sent  a  check  by  mes- 
senger to  take  up  the  note. 

May  6.  Received  draft  drawn  on  May  2,  with  accep- 
tance dated  May  4.     Discounted  this  draft  at  our  bank. 

May  10.  Paid  invoice  of  May  1  received  from  J.  B. 
Bates  &  Co.,  less  the  discount,  by  giving  our  interest- 
bearing  note  at  60  days. 

Make  a  journal  entry  showing  just  how  the  various 
columns  in  your  books  of  original  entry  should  be  posted  ; 
or,  foot  all  columns  and  prepare  the  books  for  posting 
in  the  usual  manner. 

7-8.  The  following  accounts  and  balances  appear  in 
the  ledger  of  The  Eastern  Produce  Co.,  at  the  end  of 
the  fiscal  year  May  31,  1914: 

Henry  Bryson,  investment.  $20,000;  Charles  Hawley, 
investment,  $10,000;  Smith  R.  Canfield,  investment,  $10,- 
000  ;  Henry  Bryson,  withdrawals  for  personal  use,  $2,200 
Charles  Hawley,  withdrawals  for  personal  use,  $1,500 
Smith  R.  Canfield,  withdrawals  for  personal  use,  $1,250 
real  estate,  $20,000;  cash,  $9,286.22;  notes  payable,  $3,- 
420;  accounts  receivable,  $8,682.50;  sales,  $13,842.19; 
general  expense,  $462.30;  doubtful  accounts,  $610;  furni- 
ture and  fixtures,  $360;  salaries  and  wages,  $3,068.10; 
insurance,  $360;  discounts  on  purchases,  $120.30;  pur- 
chases, $8,984.95;  interest  and  discount  (debit),  $40.16; 
accounts  payable,  $5,424.36;  merchandise  inventory  May 
31,  1913,  $4,120.14;  notes  receivable,  $1,560.18;  discounts 
on  sales,  $127.50;  freight  on  purchases,  $194.80. 

Inventories:  Merchandise  on  hand  May  31,  1914, 
$8,496.12;  furniture  and  fixtures  10%  less  than  ledger 
valuation;  insurance  paid  in  advance,  $240;  wages  due 
and  unpaid,  $380.50.     (a)   Prepare  a  trial  balance  from 


48  Questions  in  Advanced  Bookkeeping 

the  foregoing  accounts,  (b)  Using  the  trial  balance  and 
the  inventories,  prepare  a  profit  and  loss  statement  for 
the  year  ending  May  31,  1914. 

9.  Wallis  &  Irwin,  Columbus,  Ohio,  owe  your  em- 
ployer, Henry  Waters,  $1,023.64.  They  have  ignored  his 
repeated  requests  for  payment  and  you  are  told  to  draw 
on  them  at  sight  and  "  put  the  draft  through."  (a) 
Draw  the  draft,  (b)  tell  what  steps  are  necessary  from 
the  time  the  draft  is  drawn  to  the  time  of  its  payment 
by  Wallis  &  Irwin  and,  (c)  make  the  proper  entry  for 
your  employer. 

10.  E.  B.  Arnold,  B.  H.  Berry  and  R.  O.  Clark  are 
partners,  their  respective  accounts  showing  balance  as 
follows:  Arnold,  $1,000;  Berry,  $1,400;  Clark,  $1,200. 
Arnold  sells  his  interest  to  F.  C.  Doud  who  then  forms 
a  new  partnership  with  Berry  and  Clark.  Doud  invests 
an  additional  $200  in  cash  and  Berry  takes  the  firm's 
note  for  $200  to  reduce  his  share  and  to  equalize  capital 
Give  all  the  necessary  entries. 

11.  Explain  Ave  of  the  following  terms:  (a)  treas- 
ury stock,  (b)  capital  stock,  (c)  water  stock,  (d)  re- 
serve for  bad  debts,  (e)  surplus,  (f)  undivided  profits, 
(g)  dividend. 

12.  In  a  certain  business  concern  the  invoices  of  in- 
coming merchandise  are  filed  separately  after  they  are 
entered  in  a  purchase  journal  or  accounts  payable  reg- 
ister. What  columns  should  be  provided  in  the  entry 
book  named  and  what  are  the  advantages  of  this  method 
of  handling  invoices  of  purchases? 

13.  (a)  Suggest  a  method  of  making  the  entries  in  a 
special  column  cashbook  so  that  the  cash  balance  may  be 
found  without  taking  into  account  the  amounts  entered 
in  the  special  columns,     (b)   Show  by  illustration  how 


Questions  in  Advanced  Bookkeeping  49 

the  cashbook  balance  and  the  check  book  balance  are 
reconciled  with  the  bank  balance  when  the  bank  lias 
rendered  a  statement  of  your  account. 

January   1915 

For  questions  1-7  use  journal,  cashbook,  sales  book  and  pur- 
chase book  The  special  columns  required  in  the  journal  are 
Accounts  Payable,  Dr.  and  Accounts  Received,  Cr.  The  special 
columns  required  in  the  cashbook  are  as  follows:  on  the  debit 
side,  Accounts  Received  and  Discount  on  Sales;  on  the  credit 
side.  Accounts  Payable,  and  Discount  on  Purchases.  All  original 
entries  must  contain  sufficient  explanation  to  make  transactions 
clear. 

1-7.  O.  P.  Henderson,  Schenectady,  X.  Y.,  wholesale 
dealer  in  men's  and  women's  shoes,  closes  his  books  and 
finds  that  his  present  worth  is  $10,000.  In  order  to  se- 
cure more  capital  and  to  extend  his  business  he  decides 
to  incorporate.  Accordingly  a  corporation  to  be  known 
as  the  Schenectady  Shoe  Co.,  with  a  capital  stock  of  $20,- 
000,  is  organized.  Henderson  is  allowed  100  shares,  par 
value  $100  each,  for  which  he  transfers  to  the  new  firm 
all  of  the  assets  and  liabilities  of  his  former  business. 
The  remaining  100  shares  are  subscribed  for  by  outside 
parties  and  paid  for  in  cash.  The  company  decides  to 
continue  the  use  of  the  books  of  the  old  business,  (a) 
Under  date  of  Oct.  1,  1914,  enter  in  the  cashbook  the 
cash  balance  from  the  former  business  amounting  to 
$2,541.80  and  make  such  entries  as  are  necessary  to 
change  the  books  from  those  of  a  single  proprietorship 
to  those  of  a  corporation,  (b)  Make,  with  sufficient  ex- 
planations, the  necessary  entries  in  the  proper  books 
for  the  following  additional  transactions  of  the  new 
company . 


50  Questions  in  Advanced  Bookkeeping 

Oct.  2.  Issued  checks  in  payment  of  the  following 
bills.  (All  of  the  banking  business  of  the  company  will 
be  transacted  at  Merchants'  National  Bank)  : 

B.  M.  Grayson's  bill  for  October  rent,  $250;  Modern 
Office  Supply  Co.'s  bill  for  additional  typewriters  and 
other  office  furniture  just  received,  $500;  A.  G.  Wright's 
bill  for  attorney's  fees  for  advice  in  effecting  new  or- 
ganization, $15. 

A  check  for  $50  is  also  issued  in  favor  of  the  petty 
cashier  to  be  used  in  making  petty  cash  payments. 

Oct.  5.  Received  from  Howard  &  Bell,  Amsterdam, 
N.  Y.,  an  invoice  of  shoes  amounting  to  $1,594.75,  dated 
Oct.  2,  terms,  2/10,  n/30. 

Oct.  7.  Received  notice  from  Merchants  National 
Bank  that  a  check  in  our  favor  for  $75  given  to  us  by  A. 
B.  Pruitt  of  Buffalo,  N.  Y.,  and  afterward  deposited  by 
us  in  Merchants  National  Bank  has  been  returned  unpaid 
by  the  bank  on  which  it  was  drawn,  with  the  statement 
that  Pruitt  had  no  funds  in  the  bank.  The  Merchants 
National  Bank  has  charged  the  check  back  to  our  account. 

Oct.  8.  Sold  A.  C.  Long,  Ilion,  N.  Y.,  terms,  sight 
draft,  bill  of  lading  attached,  an  invoice  of  shoes  amount- 
ing to  $215.85.  Left  sight  draft  and  bill  of  lading  at 
Merchants  National  Bank  for  collection. 

Oct.  10.  Received  a  letter  from  L.  M.  Brewster, 
Oneida,  N.  Y.,  one  of  our  customers,  stating  that  he  has 
sold  his  business  and  that  his  successor,  F.  G.  Bills,  has 
assumed  his  liabilities.  Brewster  owed  us  $87.50.  The 
transfer  of  the  debt  being  satisfactory  to  us,  we  made  an 
entry  to  adjust  the  accounts  on  our  books. 

Oct.  12.  Sent  Howard  &  Bell  a  New  York  draft  for 
the  amount  of  their  invoice  of  Oct.  5,  less  the  discount. 

Oct.   13.  Received  from  Robert  Sullivan,  one  of  our 


Questions  in  Advanced  Bookkeeping  51 

traveling  salesmen,  the  following  statement :  Commis- 
sion on  sales  to  date,  $150;  traveling  expenses,  $87.50. 
Make  the  proper  entry. 

Oct.  14.  Received  from  Case  &  Hart,  Lynn,  Mass.,  an 
invoice  of  shoes  amounting  to  $254.75,  dated  Oct.  10, 
terms,  10-days  sight  draft.  Accepted  the  draft  and  re- 
turned it  to  them  ;  date  of  acceptance  Oct.  14. 

Oct.  15.  Received  notice  from  Merchants  National 
Bank  that  the  draft  on  A.  C.  Long,  left  for  collection  on 
Oct.  8,  has  been  collected  and  proceeds  placed  to  our 
credit. 

Oct.  16.  Sold  Hardy  &  Piatt,  Albany,  X.  Y.,  terms 
z/15,  n/30,  an  invoice  of  shoes  amounting  to  $425.35. 

Oct.  17.  Received  from  Grady  &  Son,  Watertown,  X. 
Y..  a  30-day  note  for  $145,  dated  Oct.  15,  in  settlement  of 
their  account.  Discounted  the  note  at  Merchants  Xa- 
tional  Bank  and  received  credit  for  the  proceeds. 

Oct.  21.  Received  from  Hardy  &  Piatt  a  New  York 
draft  in  payment  of  their  invoice  of  Oct.  16,  less  the  dis- 
count. 

(  >ct.  22.  Received  notice  from  Merchants  Collection 
Agency  that  a  note  for  ^>237  which  we  held  against  T. 
D.  Sawyer  and  which  we  had  placed  in  the  hands  of  the 
agency  for  collection  has  been  collected.  They  charged 
10%  for  collecting  and  remitted  proceeds  by  check. 

Oct.  24.   Paid  our  acceptance  of  Oct.  14  by  check. 

Oct.  31.  The  petty  cashier  hands  in  vouchers  for  the 
following  petty  cash  payments  and  receives  a  check  for 
the  total  amount : 

Cleaning  office   $2.50 

Postage  stamps    5. 

Subscription  to  Shoe  &  Leather  Gazette  3. 

Office  supplies  and  stationery  7.85 

Donation  to  city  mission   5. 


52  Questions  in  Advanced  Bookkeeping 

Prepare  the  books  of  original  entry  for  posting,  assum- 
ing that  controlling  accounts  for  sales  and  purchase 
ledgers  are  to  be  used. 

8-9.  On  Dec.  31,  1914,  the  ledger  of  Summers  & 
Barrett  showed  the  following : 

P.  D.  Summers,  investment,  $4,500;  D.  B.  Barrett,  in- 
vestment, $4,500;  P.  D.  Summers,  withdrawals,  $250;  D. 
B.  Barrett,  withdrawals,  $300;  cash,  $1,075;  merchandise 
inventory,  Jan.  1,  1914,  $3,845.87;  purchases,  $6,397.43; 
sales,  $7,453.18;  discounts  on  purchases,  $386.19;  dis- 
counts on  sales,  $483.74 ;  collection  and  exchange,  $43.25  ; 
general  expense,  $843.98;  interest  and  discount  (credit), 
$27.52;  rent,  $1,125;  freight  inward,  $328;  furniture  and 
fixtures,  $890;  salaries,  $675;  accounts  receivable,  $1,- 
684.62;  accounts  payable,  $1,500;  notes  receivable,  $925; 
notes  payable,  $500. 

The  inventories  were  as  follows : 

Merchandise    $6,974.25 

Interest  due  on  notes  receivable 11.25 

Interest  due  on  notes  payable 4.75 

Rent  due  and  unpaid 125. 

Furniture    and    fixtures    have    depreciated    10%    on    ledger 
valuation. 

(a)  Prepare  a  trial  balance  from  the  foregoing  ac- 
counts, (b)  Using  the  trial  balance  and  the  inventories, 
prepare  a  profit  and  loss  statement  for  the  year  ending 
Dec.  31,  1914. 

10.  In  the  general  ledger  of  W.  O.  Coster  &  Co.  the 
Accounts  Receivable  account  shows  a  debit  footing  of 
$12,895.37  and  a  credit  footing  of  $5,468.93;  the  Ac^ 
counts  Payable  account  shows  a  debit  footing  of  $2,« 
128.43  and  a  credit  footing  of  $5,195.47. 


Questions  in  Advanced  Bookkeeping  53 

The  sales  ledger  shows  the  following  accounts  with 
debit  balances  :  A.  H.  Burtis,  $419.29 ;  C.  E.  Snyder,  $1,- 
543.27;  M.  V.  Hughes,  Sl.12S.19;  J.  E.  Baker,  $1,324.52; 
M.  A.  Hurst.  $1,196.45;  F.   M.  Andrews.  S1.S14.72. 

The  purchase  ledger  shows  the  following  accounts  with 
credit  balances:  \\  .  K.  Landers,  $346.19;  E.  M.  Griffin, 
$819.26;  H.  B.  Cook,  $1,324.75  ;  A.  R.  Kempton,  $576.84. 

Prepare  abstracts  of  the  purchase  and  sales  ledgers, 
showing  their  agreement  with  their  respective  controlling 
accounts  in  the  general  ledger. 

11.  Define  the  following:  (a)  rebates  and  allow- 
ances, (b)  royalty,  (c)  commission,  (d)  trading  account, 
(e)  bank  reconcilement,  (f)  freight  out,  (g)  treasury 
stock,   (h)   nominal  accounts. 

12. 

INVOICE  OF   SHIPMENT 

Geneva,  X.  Y..  Nov.  16,  1914. 
Shipped  to  Saunders  &  Co. 
Albany.  X.  Y. 
By  Benj.  Richmond  to  be  sold  on  account  and  risk  of  himself 
the  following  goods  : 

100  bbl.  apples. 

On  Nov.  30  Saunders  &  Co.  received  the  above  apples 
and  paid  freight  $16.75.  On  Dec.  1,  the  apples  were  sold 
for  cash  at  $2.50  per  bbl.  After  a  commission  of  2% 
had  been  deducted,  a  check  on  the  Traders  Bank  of  Al- 
bany for  the  net  proceeds  was  remitted  to  Richmond,  (a) 
Write  the  account  sales  that  Saunders  &  Co.  send  to 
Richmond,  (b)  Write  the  check  to  accompany  the  ac- 
count sales. 


54  Questions  in  Advanced  Bookkeeping 

June  1915 

For  questions  1-4  use  a  journal  with  special  columns  provided 
as  follows :  Accounts  Payable  Dr.,  Notes  Receivable  Dr.,  Ac- 
counts Receivable  Cr.,  Notes  Payable  Cr. 

1-4.  On  May  1,  1915,  the  firm  of  Ford  &  Wright, 
Troy,  N.  Y.,  decide  to  replace  the  old  books  of  account 
with  a  new  set.  (a)  Under  date  of  May  1,  1915,  make 
the  necessary  journal  entry  to  open  the  new  books,  using 
the  following  data  from  the  balance  sheet  of  April  30 : 

Assets  :  Cash,  $3,000 ;  merchandise  inventory,  $6,000  ; 
accounts  receivable,  $17,350;  notes  receivable,  $2,000; 
furniture  and  fixtures,  $1,500;  horses,  wagons  and  har- 
ness, $950;  real  estate,  $12,000;  accrued  interest  on  notes 
receivable,  $150;  insurance  prepaid,  $95. 

Liabilities:  Notes  payable,  $1,500;  accounts  payable, 
$5,500;  mortgage  payable,  $6,000;  interest  accrued  on 
notes  payable,  $45. 

Capital  accounts:  S.  R.  Ford,  $15,000;  A.  B.  Wright, 
$15,000. 

(b)  Record,  with  sufficient  explanations,  the  following 
selected  transactions : 

May  1.  Henry  WTeir  renews  his  note  for  $1,500  with 
interest  amounting  to  $45  by  giving  us  a  30-day  note  to 
cover  the  face  of  the  old  note  and  the  interest  due. 

May  3.  Brown  &  Clark  have  accepted  our  draft  at  30- 
days  sight  for  balance  of  account  $329. 

May  3.  Returned  to  Mason  &  Co.  goods  invoiced  at 
$50. 

May  5.  Accepted  T.  K.  Barton's  draft  at  10-days  sight 
for  $400  to  apply  on  account. 

May  6.  Drew  at  30-days  sight  on  Charles  Eaton,  a 


Questions  in  Advanced  Bookkeeping  55 

customer,  in   favor  of  G.  B.  Race  to  apply  on  our  ac- 
count; face  of  draft,  $500. 

May  7.  Received  from  Myers  &  Co.  their  60-day  note 
for  $350  in  payment  of  invoice  of  April  29.  We  indorsed 
the  note  to  Mason  &  Co.  and  received  credit  at  its  face 
value. 

May  10.  Lost  by  hre  a  wagon  valued  at  §275. 

May  11.  Allowed  John  Silver,  a  customer,  $20  for 
goods  he  received  in  damaged  condition. 

May  12.  Received  from  John  Baker,  to  apply  on  his 
account,  William  Cogan's  note  for  $200,  which  Baker  has 
indorsed  to  us.  The  note  has  30  days  to  run  and  we  have 
agreed  to  take  it  less  the  discount  for  that  time. 

May  14.  Received  from  Gatley  &  Co.  account  sales 
for  shipment  Xo.  5,  showing  net  proceeds  $695.  for  which 
no  remittance  has  been  made. 

May  15.  Received  from  John  Silver,  to  apply  on  his 
account,  our  acceptance  due  today  in  favor  of  T.  k.  Bar- 
ton for  $400. 

(c)   Prepare  the  journal  for  posting. 

5-6.  From  the  following  trial  balance  and  inventories, 
prepare  a  trading  and  profit  and  loss  statement  for  the 
six  months  ended  May  31,   1915: 

Cash    $10,000. 

Notes  receivable   10.500. 

Accounts  receivable  35,000. 

Merchandise     inventory,     Dec.     1, 

1914 6,000. 

Furniture  and  fixtures   2,000. 

Delivery  automobiles 5.000. 

Real  estate   25.000. 

Notes  payable  $  23.000. 

Accounts  payable 1 1.000. 

Purchases    95.000. 


56  Questions  in  Advanced  Bookkeeping 

Returned   purchases    $    3,250. 

Discount  on  purchases 1,440. 

Sales 140,000. 

Returned   sales    $2,500. 

Discount  on  sales  2,800. 

Freight  inward   1,650. 

Advertising 2,500. 

General  expense   8.500. 

Salaries  and  wages 6,300. 

Commissions 4,700. 

Traveling  expenses 6,000. 

Interest  and  discount 520. 

Insurance  (one  year) 420. 

Reserve  for  bad  debts 5,500. 

A.  M.  Trainor,  drawing  account  . .       2,100. 
G.  H.  Warner,  drawing  account  . .       1,700. 

A.  M.  Trainor,  capital  account 22,000. 

G.  H.  Warner,  capital  account 22,000. 


$228,190.  $228,190. 

Inventories : 

Merchandise  $9,000. 

Furniture  and  fixtures 1,800. 

Delivery  automobiles    4,500. 

Real  estate   25,000. 

Insurance  (unexpired)    210. 


7.  (a)  Explain  concisely  the  difference  between  single 
entry  and  double  entry  bookkeeping,  (b)  In  changing 
from  single  entry  to  double  entry,  what  is  the  difference 
in  procedure  when  the  old  ledger  is  used  instead  of  a 
new  ledger? 

8.  On  June  1,  1915,  The  Home  Manufacturing  Com- 
pany is  incorporated  under  the  laws  of  the  State  of  New 
York  to  acquire  and  conduct  'he  business  of  the  firm  of 


Questions  in  Advanced  Bookkeeping  57 

R.  O.  Browning  and  H.  E.  Johnson.  The  authorized 
capital  stock  of  the  company  is  $250,000,  par  value  $100 
a  share.  The  company  has  agreed  to  take  over  the  net 
assets  of  the  partnership  at  the  following  valuation  and 
to  issue  in  payment  1,000  shares  of  stock  to  each  of  the 
two  partners:  real  estate,  S120.000;  tools  and  equipment, 
$60,000;  raw  materials,  $20,000.  A  bill  of  sale  is  exe- 
cuted and  the  stock  duly  issued.  O.  E.  Kitchell  and  R. 
K.  Taylor  subscribe  for  100  shares  each.  On  June  10 
the  stock  subscribed  for  by  Kitchell  and  Taylor  is  paid  for 
and  issued.  On  June  14  Browning  and  Johnson  each 
donate  100  shares  of  stock  to  the  company  to  be  sold  for 
the  purpose  of  securing  additional  working  capital. 

From  the  foregoing  data  make  the  entries  necessary  to 
open  the  books  of  the  company. 

9.  Define  the  following:  (a)  depreciation,  (b) 
voucher,  (c)  register,  (d)  asset,  (e)  liability  (f)  ledger 
account,  (g)  posting,  (h)  goodwill,  (i)  drawing  account. 

10.  On  May  1,  1915,  the  cashbook  of  a  certain  busi- 
ness showed  a  balance  of  $18,625.75. 

On  May  31  the  cash  transactions  for  the  month  were 
represented  by  the  following  footings  of  the  special  col- 
umns : 

Debit  side : 

Accounts  Receivable,  $5,372.10. 
Discounts  on   Sales,  $352.70. 
Cash  Sales,  $1,250.40. 
Sundries,  $3,479.20. 

Credit  side : 

Accounts    Payable.   $3,948.27. 
Discount  on  Purchases,  $249.61. 
Expense,  $217.34. 
Sundries,  $5,120.10. 


58  Questions  in  Advanced  Bookkeeping 

Transfer  the  above  data  to  your  paper,  balance  the 
cashbook  and  indicate  the  postings  required. 

11.  (a)  How  should  goods  sent  out  on  consignment 
be  treated  on  the  books  of  a  company?  (b)  When  the 
account  sales  has  been  received  from  the  consignee,  what 
entry  or  entries  should  be  made  ? 

12.  (a)  What  is  a  bill  book?  (b)  Explain  how  the 
bill  book  may  be  used  as  a  book  of  original  entry. 

January  1916 

For  question  1  use  journal,  cashbook,  sales  journal  or  sales 
book  and  purchase  journal  or  purchase  book.  The  special 
columns  required  in  the  journal  are  Accounts  Payable  Dr.,  Notes 
Receivable  Dr.,  Accounts  Receivable  Cr.,  and  Notes  Payable  Cr. 
The  special  columns  required  in  the  cashbook  are  as  follows: 
On  the  debit  side,  Discount  on  Sales,  Accounts  Receivable  and 
Sales  ;  on  the  credit  side,  Discount  on  Purchases,  Accounts  Pay- 
able, and  Expense.  All  original  entries  must  contain  sufficient 
explanation  to  make  transactions  clear. 

1.  A.  B.  Carter  and  E.  F.  Gordon  have  been  engaged 
in  business  in  Syracuse,  N.  Y.,  Carter  in  the  carpet  and 
rug  business,  Gordon  in  the  furniture  business.  On  No- 
vember 1,  1915,  they  form  a  partnership,  under  the  firm 
name  of  Carter  and  Gordon,  for  the  purpose  of  conduct- 
ing a  wholesale  and  retail  carpet  and  furniture  business. 
The  new  firm  is  to  take  over  all  the  assets  of  the  partners 
and  to  assume  all  the  existing  liabilities.  The  partner 
whose  statement  of  assets  and  liabilities  shows  the  smaller 
net  worth  is  to  make  an  additional  cash  contribution  to 
equalize  the  investments. 

The  following  statements  of  assets  and  liabilities  pre- 
pared by  the  partners  form  the  basis  of  their  respective 
investments : 


Questions  in  Advanced  Bookkeeping  59 

A.  B.  Carter 

Cash,  $5,000;  merchandise  inventory,  $12,200;  office 
and  store  fixtures,  $2,500 ;  horses,  wagons  and  harnesses, 
$900;  notes  receivable  (schedule  A),  $1,560;  accounts 
receivable  (schedule  B),  $8,800.10;  insurance  prepaid, 
$240;  notes  payable  (schedule  C),  $1,500;  accounts  pay- 
able (schedule  D),  $5,410.30. 

Schedule  A     Notes  reeeivable 
3-months'  note  dated  Oct.  9.  1915.  Henry  Mason,  maker,  $    300. 
4-months'  note  dated  Aug.  23,  1915,  John  White,  maker,  $1,260. 

Schedule  B     Accounts  receivable 

John   White    $  3.250.97       Henry  Mason    $  2.980.63 

William  Dengate   ...     1,655.40      D.   E.    Sayles 913.10 

Schedule  C    Xotes  payable 
2-months'  interest-bearing  note  dated  Sept.  16,  1915,  in  favor  of 

Taylor  &  Co.  $1,000. 
3-months'  note  dated  Oct.  19,  1915,  in  favor  of  Detroit  Chair  Co. 

$500. 

Schedule  D     Accounts  payable 

Tavlor    &    Co $2,760.  Michigan       Furniture 

Detroit  Chair  Co 1,409.60  Co $  1.240.70 

E.  F.  Gordon 

Cash,  $6,000;  merchandise  inventory,  $17,520:  office 
and  store  fixtures,  $1,675;  auto  delivery  truck.  $960; 
notes  receivable  (schedule  A),  $1,250;  accounts  receiv- 
able (schedule  B),  $9,723.50;  accounts  payable  (schedule 
C),  $3,231.25. 

Schedule  A     Xotes  receivable 
3-months'   note   dated    Aug.    31,    1915,    Donald    Morgan,    maker, 
$1,250. 


60  Questions  in  Advanced  Bookkeeping 

Schedule  B     Accounts  receivable 

Donald   Morgan    ....$1,975.30      Howard   Gibson    ....$3,522.60 
James  Blake  2,363.90       Harvey  Bullis 1,861.70 

Schedule  C    Accounts  payable 
Smith  Bros $  1,495.75       Sanford  &   Co $  1.735.50 

(a)  Under  date  of  November  1,  1915,  make  the  open- 
ing entries  for  the  investments  of  the  two  partners. 
(Carter  contributed  his  check  for  his  additional  invest- 
ment.) (b)  Record,  with  sufficient  explanations,  the  fol- 
lowing selected  transactions : 

Nov.  3.  Bought  of  Smith  Bros.,  Amsterdam,  N.  Y.,  a 
lot  of  carpets  amounting  to  $1,540;  terms,  5/10,  2/30,  n/90. 

Nov.  4.  Sold  John  White,  City,  furniture  amounting 
to  $680  and  received  his  check  for  $300,  balance  on  ac- 
count. Paid  rent  for  month  in  advance,  $150.  Paid 
freight  on  invoice  from  Smith  Bros.,  $23.45.  Received 
New  York  draft  from  Donald  Morgan  to  apply  on  his 
account,  $875.20. 

Nov.  6.  Cash  sales  for  day,  $367.35.  Paid  for  clean- 
ing windows,  $2.  Discounted  at  First  National  Bank 
John  White's  note,  dated  Aug.  23,  and  received  credit  for 
the  proceeds. 

Nov.  9.  Bought  of  Sanford  &  Co.,  Philadelphia,  Pa., 
carpets  and  rugs  amounting  to  $1,290;  terms,  5/10,  2/30, 

/  90' 

Nov.  12.  Bought  of  Michigan  Furniture  Co.,  Grand 
Rapids,  Mich.,  furniture  amounting  to  $953;  terms,  4- 

months  note. 

Nov.  15.  D.  E.  Sayles  having  failed  in  business  settles 
with  his  creditors  for  50  cents  on  the  dollar.  His  check 
for  $456.55  has  been  received  and  accepted  in  full  settle- 
ment of  his  account.     Sent  our  check  to  Smith  Bros,  in 


Questions  in  Advanced  Bookkeeping  6i 

payment  of  invoice  of  Oct.   12,   1915;  amount,  $670.50, 
less  2%. 

Nov.  16.  Received  from  Howard  Gibson,  to  apply  on 
his  account,  our  interest-bearing  note  in  favor  of  Taylor 
&  Co.,  for  $1,000,  due  to-day. 

Nov.  19.  Sold  Donald  Morgan  furniture  amounting  to 
$760;  terms  :'   l0>  2/:{ft,  %o- 

Nov.  24.  The  First  National  Bank  notified  us  that 
Charles  Moore's  note  for  $265,  which  was  left  for  collec- 
tion and  which  matured  yesterday,  was  protested  for  non- 
payment ;  the  protest  fees,  $2.50,  were  charged  to  our 
account. 

Nov.  27.  Received  check  from  Donald  Morgan  in  pay- 
ment of  bill  of  Nov.  19,  less  the  discount. 

Nov.  29.  Sold  Henry  Lamb  carpets  and  rugs  amount- 
ing to  $975  and  received  his  60-day  note  in  payment.  We 
indorsed  this  note  to  San  ford  &  Co.  and  sent  it  to  them 
to  apply  on  our  account.  Returned  to  Sanford  &  Co.  2 
rolls  of  carpet  amounting  to  $143.35;  this  carpet  was  re- 
ceived with  last  invoice  but  was  not  the  pattern  ordered. 

Nov.  29.  A  30-day  draft  in  our  favor  drawn  on  the 
26th  on  James  Blake  for  $1,200  has  been  accepted  and 
returned. 

Nov.  30.  Received  check  from  Donald  Morgan  in  pay- 
ment of  note  due  to-day  (See  schedule  A  of  Gordon's 
invested  assets).  Paid  by  check  the  following:  salaries 
of  bookkeeper  and  clerks  for  month  $250 ;  invoice  of  sta- 
tionery, ^27;  bill  for  gas  and  electric  light  for  month. 
$22.75. 

(c)  Foot  and  rule  the  books  of  original  entry  and  in- 
dicate how  footings  should  be  posted.     (Do  not  post.) 

2.  Define  the  following:  (a)  sinking  fund,  (  b)  way- 
bill,  (c)  certified  check,   (d)  account  sales,   (e)  account 


62  Questions  in  Advanced  Bookkeeping 

current,  (f)  preferred  stock,  (g)  fixed  asset,  (h)  accom- 
modation note. 

3.  During  the  year  ended  Dec.  31,  1915,  George  But- 
ler's books  have  been  kept  by  single  entry.  Explain  fully 
how  to  ascertain  his  net  gain  for  the  year. 

4.  H.  M.  Kerr  and  O.  E.  Weir  are  partners  in  a  man- 
ufacturing concern  under  the  firm  name  of  Kerr  &  Weir. 
Their  investments  are  as  follows:  H.  M.  Kerr,  $30,000; 
O.  E.  Weir,  $20,000.  They  decide  to  incorporate  their 
business  with  a  capital  stock  of  $75,000,  consisting  of  750 
shares  at  $100  a  share.  The  partners  are  to  receive  paid 
up  stock  for  their  respective  interests  and  goodwill  as 
follows:  H.  M.  Kerr,  350  shares;  O.  E.  Weir,  250 
shares;  A.  S.  Miller,  W.  G.  Burton  and  J.  M.  Roman 
each  subscribe  for  10  shares.  The  rest  of  the  capital 
stock,  120  shares,  is  not  to  be  sold  till  later.  The  follow- 
ing list  of  assets  and  liabilities  of  the  old  firm  has  been 
accepted  by  the  corporation: 

Assets  Liabilities 

Accounts  jeceivable $12,000.      Accounts   payable $  4,800. 

Raw  materials 9,000.      Notes   payable 1,500. 

Plant  9,000. 

Real  estate 10,000. 

Cash    7,600. 

Finished   goods 8,700. 

Make  the  necessary  journal  entries  (a)  to  close  the 
books  of  the  old  firm,  (b)  to  open  the  books  of  the  cor- 
poration. (A  new  set  of  books  is  to  be  used  by  the  cor- 
poration.) 

5-6.  From  the  following  trial  balance  and  inventories, 
prepare  a  trading  and  profit  and  loss  statement  for  the 
year  ended  Dec.  31,  1915: 


Questions  in  Advanced  Bookkeeping  63 

Paul  Wilson,  investment $15,000. 

Carl  Young,  investment 15,000. 

Paul    Wilson,    withdrawals $1,200. 

Carl    Young,   withdrawals 1,500. 

Cash    7,269.50 

Merchandise   inventory,   Jan.    1, 

1915   8,471.20 

Purchases    64,396.75 

Returned  purchases   1,167.82 

Discount  on  purchases 961.30 

Sales    94,392.40 

Returned   sales    1,762.50 

Discount   on   sales 1.975.80 

General  expense 6,332.45 

Rent    2,200. 

Insurance 135. 

Freight  inward 1,246.75 

Interest  and  discount   210.42 

Furniture  and  Fixtures   1,600. 

Delivery  equipment    1,200. 

Xotes  receivable   9,600. 

Accounts  receivable  34,354.73 

Xotes   payable    10,500. 

Accounts   payable    4,362.74 

Reserve  for  bad  debts   1,650. 


$143,244.68      $143,244.68 


Inventories,  Dec.  31,  1915: 

Merchandise     $9,700. 

Accrued  interest  on  notes  receivable   112.50 

Interest  accrued  on  notes  payable   61.25 

Rents  due  for  December  and  unpaid  200. 

Furniture  and  fixtures,   book  value  less   10%  depreciation. 
Delivery  equipment,  book  value  less   10%  depreciation. 


64  Questions  in  Advanced  Bookkeeping 

June  1916 

For  question  1  use  journal,  cashbook,  sales  journal  or  sales 
book  and  purchase  journal  or  purchase  book.  The  special  col- 
umns required  in  the  journal  are  Accounts  Payable  Dr.,  Notes 
Receivable  Dr.,  Accounts  Receivable  Cr.  and  Notes  Payable  Cr. 
The  special  columns  required  in  the  cashbook  are  as  follows  :  on 
the  debit  side,  Accounts  Receivable,  Discount  on  Sales,  Cash  Sales 
and  Net  Receipts;  on  the  credit  side,  Accounts  Payable,  Dis- 
count on  Purchases,  Expense  and  Net  Payments.  All  original 
entries  must  contain  sufficient  explanation  to  make  transactions 
clear. 

1.  On  May  1,  1916,  R.  M.  Knowles  and  A.  F.  Hooper 
join  as  equal  partners  in  the  purchase  of  the  wholesale 
dry  goods  business  formerly  conducted  by  Brown  & 
Steele  of  Kingston,  N.  Y. 

Brown  &  Steele  execute  a  bill  of  sale  in  which  appears 
the  following  list  of  assets  and  liabilities: 

Merchandise,  $11,314.57;  furniture  and  fixtures,  $1215  ; 
notes  receivable  (schedule  A),  $975;  accounts  receivable, 
$5570;  accounts  payable,  $3495.90. 

Schedule  A     Notes  receivable 
'30-day  interest-bearing  note  dated  April  4,  1916,  William  G.  Bar- 
ton, maker,  $525 
90-day  note  dated  April  1*5,  1916,  Robert  Scott  &  Co.,  maker,  $450 

In  addition  the  bill  of  sale  provides  that  Brown  & 
Steele  are  to  receive  $2000  for  the  goodwill  of  the  busi- 
ness. 

Knowles  &  Hooper  make  settlement  by  a  cash  payment 
of  $12,578.77  and  a  six  months'  note,  dated  May  1  and 
bearing  interest  at  6%,  for  the  remainder  of  the  purchase 
price. 

(a)  As  bookkeeper   for  the  firm,  make  the  opening 


Questions  in  Advanced  Bookkeeping  65 

journal  entry  required  in  the  above  transaction,  (b) 
Record,  with  sufficient  explanations,  the  following  se- 
lected transactions : 

May  1.  Knowles  and  Hooper  each  make  an  additional 
cash  investment  of  $2000.  This  cash  has  been  deposited 
in  the  First  National  Bank  at  which  all  banking  business 
will  be  done.  All  cash  received  will  be  deposited  on  the 
day  received  and  all  payments,  unless  otherwise  specified, 
will  be  made  by  check. 

May  1.  Paid  Elmer  Truitt  for  repainting  signs,  §25. 

May  2.  Gave  check  for  $50  to  petty  cashier  to  be  used 
in  making  petty  cash  payments  during  the  month. 

May  2.  Received  from  Crawford  &  Son,  Ilion,  X.  Y.,  a 
check  in  payment  of  bill  of  April  15  for  $550,  less  a  dis- 
count of  2%.  • 

May  3.  Received  from  Boyd  &  Snyder,  Albany,  X.  Y., 
terms  15-day  acceptance,  an  invoice  of  merchandise 
amounting  to  $1257.36.  Their  draft  dated  May  2  and 
payable  at  First  X'ational  Bank  has  been  accepted  and  re- 
turned to  them. 

May  4.  Made  payments  by  bank  draft  as  follows : 
William  Brady  for  invoice  of  Aprfl%5,  $840.27,  less  3%  ; 
West  &  Co.  for  invoice  of  April  30,  $940.25,  less  5%. 
Paid  exchange  on  drafts  55^. 

May  4.  Sold  to  Quirk  &  Olney,  Amsterdam,  X.  Y., 
terms  one-half  cash,  balance  15-day  note,  an  invoice  of 
merchandise  amounting  to  $950.  Their  check  and  note 
dated  to-day  have  been  received. 

May  4.  Received  a  check  from  William  G.  Barton  in 
payment  of  his  note  and  interest  due  to-day. 
May  4.  Paid  insurance  premium,  $30.50. 
May  5.  Received  from  H.  G.  Klenncrt,  terms  2/10,  D/80, 
an  invoice  of  merchandise  amounting  to  $218.95. 


66  Questions  in  Advanced  Bookkeeping 

.May  6.  Paid  freight  on  goods  purchased  to  date, 
$25.90. 

May  10.  Received  a  letter  from  Quirk  &  Olney,  stating 
that  in  our  invoice  of  May  4  they  have  found  a  few 
articles  not  up  to  the  standard  and  asking  us  to  make 
them  an  allowance  of  $50.  Agreeing  to  this,  we  indorse 
$50  as  part  payment  on  the  note  of  May  4. 

May  13.  Sold  L.  M.  Plunkett,  Oswego,  N.  Y.,  terms, 
2/io>  %o>  an  invoice  of  merchandise  amounting  to 
$1147.30. 

May  13.  Sent  check  to  H.  G.  Klennert  in  payment  of 
his  invoice  of  May  5,  less  the  discount. 

May  13.  Discounted  Robert  Scott  &  Co.'s  note  of  April 
15  at  First  National  Bank,  and  received  credit  for  the 
proceed?. 

May  15.  Made  cash  sales  amounting  to  $345.90. 

May  15.  Paid  office  salaries,  $75. 

May  18.  Received  notice  from  First  National  Bank 
that  our  acceptance  in  favor  of  Boyd  &  Snyder  has  been 
paid  and  charged  to  our  account. 

May  19.  Received  from  Quirk  &  Olney  a  check  in  pay- 
ment of  the  balance  due  on  their  note  of  May  4. 

May  20.  Robert  Lear,  one  of  our  regular  customers, 
recently  remitted  to  us  a  check  in  payment  of  a  bill 
amounting  to  $358.90.  He  neglected  at  the  time  to  de- 
duct from  his  remittance  the  2%  discount  to  which  he 
was  entitled  and  he  now  calls  our  attention  to  the  over- 
sight. We  credit  him  for  the  amount  of  the  discount 
and  send  him  a  credit  memorandum. 

May  20.  Made  cash  sales  amounting  to  $215.40. 

May  22.  Hill  &  Warren,  dealers  in  office  supplies,  send 
in  the  following  bill  for  goods  furnished  to  date :  1  type- 
writer, $75 ;  1  office  desk  and  chair,  $45  ;  paper  baskets, 


Questions  in  Advanced  Bookkeeping  67 

ink  stands,  etc.,  $15.     We  credit  their  account  for  the 
amount  of  the  bill. 

May  31.  The  petty  cashier  presents  vouchers  for  the 
following  cash  payments  made  by  him : 

Postage,  stationery,  etc $19.50 

Cleaning  offices    5. 

Messenger    boy    2.50 

Telegrams    7.95 

Issued  a  check  to  restore  the  petty  cash  fund  to  its 
original  amount. 

(c)  Foot  and  rule  the  books  of  original  entry  and  in- 
dicate how  footings  should  be  posted.     (Do  not  post.) 

2.  From  the  following  trial  balance  taken  from  the 
books  of  Klein  &  Jones,  construct  a  trading  and  profit 
and  loss  statement  for  the  three  months  ended  April  30, 
1916: 

Trial  Balance,  April  30,  1916 

A.  R.  Klein,  capital  account $  5,250. 

A.  R.  Klein,  drawing  account..     $      250. 

W.  P.  Jones,  capital  account 6,750. 

W.  P.  Jones,  drawing  account.  300. 

Merchandise    inventory,   Jan.    1, 

1916   12,087.13 

Purchases    8,540.27 

Returned  purchases 240.60 

Sales  15,027.90 

Returned   sales    90.56 

Freight  inward   325.90 

Advertising  495. 

Sales  discount  323.64 

Purchase  discount   259.40 

Wages    1,500. 

Rent    850. 

General  expense   780.97 

Interest  and  discount 85.33 


68  Questions  in  Advanced  Bookkeeping 

Office  equipment  $     950. 

Notes  receivable  540. 

Accounts  receivable  1,096.40 

Accounts  payable   $  1,349.50 

Notes  payable   750. 

Cash   1,412.20 


$29,627.40        $29,627.40 


Inventories,  April  30,  1916: 

Merchandise  $12,153.30 

Rent    prepaid    50. 

Wages  due  and  not  paid 85. 

Office  equipment,  book  value  less  3%  depreciation 

3.  (a)  Two  ledgers  are  before  you.  One  is  the 
ledger  of  a  partnership  concern  just  before  the  partner- 
ship is  converted  into  a  corporation ;  the  other  is  the  new 
ledger  of  the  corporation.  What  differences  should  you 
find  in  the  accounts  in  the  two  ledgers?  (b)  In  what 
way  does  the  disposition  of  the  net  profit  differ  with  re<- 
spect  to  partnerships  and  corporations  ? 

Hale  &  Elkins 

1916  1916 

Jan.  5    Goods    returned.  .$50      Jan.  1     Invoice  3/10  n/30  $510.50 

Jan.  1  Freight  prepaid 
on  above  in- 
voice        17.20 

The  above  represents  Howard  Thompson's  account 
with  Hale  &  Elkins. 

Mr.  Thompson  resides  in  Elmira,  N.  Y.,  and  transacts 
all  of  his  business  at  the  Commercial  National  Bank  of 
that  city,  Henry  Simmons,  cashier.  On  January  10  he 
gives  his  check  to  this  bank  in  payment  for  a  bank  draft 


Questions  in  Advanced  Bookkeeping  69 

drawn  on  the  Traders  Bank  of  Chicago  and  payable  to 
Hale  &  Elkins  for  an  amount  sufficient  to  settle  the  above 
account. 

Write  the  check  and  the  bank  draft  called  for  in  the 
above  transaction. 

January  1917 

For  question  1  use  journal,  cashbook,  sales  journal  or  sales 
book  and  purchase  journal  or  purchase  book.  The  special  col- 
umns required  in  the  journal  are  Accounts  Payable  Dr.,  Notes 
Receivable  Dr.,  Accounts  Receivable  Cr.  and  Notes  Payable  Cr. 
The  special  columns  required  in  the  cashbook  are  as  follows: 
On  the  debit  side,  Accounts  Receivable,  Discount  on  Sales  and 
Sales;  on  the  credit  side,  Accounts  Payable,  Discount  on  Pur- 
chases and  Expense.  All  original  entries  must  contain  sufficient 
explanation  to  make  transactions  clear. 

1.  M.  J.  Phelps  of  Albany,  N.  Y.,  wholesale  dealer  in 
dry  goods,  closes  his  books  at  the  end  of  November,  1916, 
and  finds  that  his  assets  and  liabilities  are  as  follows : 

Assets:  Cash  on  deposit  in  Bank  of  Commerce, 
$1298.16;  merchandise  as  per  inventory,  $12,906.18; 
notes  receivable,  $2496.24;  accounts  receivable,  $4875.50; 
furniture  and  fixtures,  $895;  accrued  interest  on  notes 
receivable,  $4.83. 

Liabilities:  Notes  payable,  $1500;  accounts  payable, 
$3687.43;  interest  accrued  on  notes  payable,  $1.28. 

Among  the  assets  are  the  following: 

Notes  Receizable 

An  interest-bearing  note  dated  Nov.  20,  payable  in  one  month, 
Samuel  Barker,  maker,  $1000 
60-day  note  dated  Nov.  15,  R.  M.  Peters,  maker,  $525 


70  Questions  in  Advanced  Bookkeeping 

Accounts  Receivable 

L.  M.  Lester,  Schenectady,  N.  Y.,  $840  (invoice  dated  Nov.  21, 
terms,  yi0,  D/30). 

A.  K.  Dunning,  Buffalo,  N.  Y.,  $945.16  (invoice  dated  May  1, 
terms,  3/10,  n/30). 

Among  the  liabilities  are  the  following: 

Notes  Payable 

30-day  interest-bearing  note  dated  Nov.  20,  in  favor  of  Ward  & 
Howe,  Syracuse,  N.  Y.,  $700 

Three-months  note  dated  Nov.  1,  in  favor  of  the  Bank  of  Com- 
merce, Albany,  N.  Y.,  $800. 

Accounts  Payable 
Francis  Bros.,  New  York,  N.  Y.,  $1525  (invoice  dated  Oct.  15, 

terms,  730,  %o> 

Howard  &  Jones,  Rochester,  N.  Y.,  $1422.23  (invoice  dated 
Nov.  25,  terms  y20,  n/60) 

Edwards  &  Hemming,  Watertown,  N.  Y.,  $740.20  (invoice 
dated  Nov.  30,  terms,  n/30) 

On  Dec.  1  Phelps  admits  William  Harrison  as  an  equal 
partner,  the  new  firm  to  be  known  as  Phelps  &  Harrison. 
Harrison  invests  an  amount  equal  to  Phelps's  net  invest- 
ment, paying  one-half  in  cash  and  giving  his  two-months 
note,  dated  Dec.  1,  for  the  balance. 

(a)  Assuming  that  a  new  set  of  books  is  opened,  make 
the  entries  for  the  foregoing  facts,  (b)  Record  the  fol- 
lowing selected  transactions  for  the  month  of  December: 

Dec.  2.  Received  from  L.  M.  Lester  a  New  York  draft 
in  payment  of  his  invoice  of  Nov.  21,  less  the  discount. 

Dec.  4.  Received  from  E.  C.  Roberts,  Newburg,  N.  Y., 
terms  one-half  cash,  balance  15-day  interest-bearing  note, 
an  invoice  of  goods  amounting  to  $2195.48.  A  check  and 
a  note  have  been  forwarded  by  mail  to  Roberts. 

Dec.  6.  Paid  by  check  the  following  bills :     Rent,  $125  ; 


Questions  in  Advanced  Bookkeeping  71 

office  supplies,  $36.40 ;  typewriter  and  desks,  $250 ;  insur- 
ance, $30 ;  telephone,  $5. 

Dec.  6.  Cash  sales  for  the  day,  $225.80. 

Dec.  8.  Sold  R.  D.  Langley,  Rome,  X.  Y.,  terms  one- 
half  cash,  balance  on  account,  a  bill  of  goods  amounting 
to  $840.50. 

Dec.  11.  A.  K.  Dunning  failed  in  business  and  compro- 
mised with  his  creditors  on  a  basis  of  75$  on  the  dollar. 
In  accordance  with  this  agreement  we  received  his  check 
in  payment  of  his  invoice  of  May  1. 

Dec.  12.  Sent  a  check  to  Howard  &  Jones  in  payment 
of  their  invoice  of  Nov.  25,  less  the  discount. 

Dec.  13.  Received  Langley's  check  for  the  cash  pay- 
ment required  in  sale  of  Dec.  8. 

Dec.  15.  We  accepted  and  returned  to  Francis  Bros, 
their  draft  at  10  days  sight  in  payment  of  their  invoice 
of  Oct.  15,  less  the  discount. 

Dec.  19.  Sent  E.  C.  Roberts  a  check  in  payment  of  our 
note  and  interest  due  to-day. 

Dec.  20.  Received  from  Ames  &  Wallace,  Rochester, 
N.  Y.,  terms,  10  days  net,  an  invoice  amounting  to 
$1254.16. 

Dec.  20.  Received  from  Samuel  Barker  a  letter  inclos- 
ing our  note  of  Xov.  20,  in  favor  of  Ward  &  Howe  and 
indorsed  by  them  to  Barker.  He  asks  us  to  apply  this 
note  and  interest  on  his  note  of  Nov.  20  and  to  allow  him 
a  few  days  in  which  to  pay  the  balance  of  the  note.  We 
comply  with  his  request. 

Dec.  21.  Prepaid  by  check  our  note  of  Nov.  1,  in  favor 
of  the  Bank  of  Commerce,  less  the  discount  for  the 
unexpired  time. 

Dec.  22.  Cash  sales  for  the  day,  $164.28. 

Dec.  26.  Sold  Alexander  Purdy,  Herkimer,  N.  Y.,  on 


72  Questions  in  Advanced  Bookkeeping 

his   90-day   note,   a   bill   of   merchandise   amounting  to 

$45075. 

Dec.  26.  Received  from  Ames  &  Wallace  a  letter  stat- 
ing that  they  prepaid  the  freight  amounting  to  $16.98  on 
their  invoice  of  Dec.  20  but  neglected  to  add  the  freight 
to  the  invoice.     We  credit  them  for  the  amount  of  the 

freight. 

Dec.  26.  Sent  check  to  Edwards  &  Hemming  in  pay- 
ment of  their  invoice  of  Nov.  30. 

Dec.  30.  Sent  check  to  Ames  &  Wallace  in  payment  of 
their  invoice  of  Dec.  20,  including  the  freight  that  they 
prepaid. 

(c)  Foot  and  rule  the  books  of  original  entry  and  indi- 
cate how  footings  should  be  posted.     (Do  not  post.) 

2.  From  the  following  trial  balance  and  inventories 
taken  from  the  ledger  of  Dickinson  &  Gray,  construct  a 
trading  and  profit  and  loss  statement  'for  the  year  ending 
Dec.  31,  1916: 

C.  E.  Dickinson,  capital  account     $15,893.40 

C.  E.  Dickinson,  drawing  ac- 
count       $  1,200. 

E.  L.  Gray,  capital  account 10,296.50 

E.  L.  Gray,  drawing  account. ..  750. 

Merchandise  inventory  Jan.  1, 
1916 12,393.45 

Purchases   13,516.80 

Sales 22,816.55 

Returned  purchases 895.40 

Returned   sales    1,258.75 

Freight  inward  750.95 

Discount  on  sales 1,528.38 

Discount  on  purchases 1,240.64 

Traveling  expenses   1,185.25 

Rent    800. 

General  expense   3,772.61 


Questions  in  Advanced  Bookkeeping  73 

Wages    $  1.390. 

Interest  and  discount $         19.73 

Furniture  and  fixtures 975. 

Motor  trucks  3,150. 

Accounts  receivable  11,216.80 

Notes  receivable  1,530. 

Accounts  payable   5,280.45 

Notes  payable   1,000. 

Cash 2,024.68 


$57,442.67        $57,442.67 


Inventories,  Dec.  31,  1916: 

Merchandise    on    hand $15,325.48 

Accrued  interest  on  notes  receivable 26.14 

Interest  accrued  on  notes  payable 12.81 

Wages  due  and  not  paid 275. 

Motor  trucks,  less  \2y2%  depreciation 
Furniture  and  fixtures,  less  8%  depreciation 

3.  The  following  is  an  outline  of  the  balance  sheet  of 
two  partners.  Copy  the  outline  on  your  paper  and  on  the 
blank  lines  write  the  titles  of  accounts  that  might  prop- 
erly appear  in  such  a  balance  sheet.  Do  not  supply  the 
amounts.     Use  any  names  you  choose  for  the  partners. 


CURRENT   ASSETS  CURRENT   LIABILITIES 

Sxxxx.xx  $xxxx.xx 

xxxx.xx  XXXX.XX  .pXXXX.XX 


xxxx.xx 

xxxx.xx  $xxxx.xx 


FIXED   LIABILITIES 

xxxx.xx 


-4  Questions  in  Advanced  Bookkeeping 

FIXED   ASSETS  PROPRIETORSHIP 

$xxxx.xx  $xxxx.xx 

xxxx.xx  $xxxx.xx     xxx.xx 


$xxxx.xx. 

xxx.xx  $xxxx.xx 


$xxxx.xx 

xxx.xx 


$xxxx.xx 

xxx.xx     xxxx.xx 


$xxxx.xx  .     $xxxx.xx 


4.  Explain  the  advantages  of  controlling  accounts  and 
special  columns  in  books  of  original  entry. 

5.  Define  five  of  the  following:  (a)  royalty,  (b) 
bonus,  (c)  unsubscribed  stock,  (d)  bonds,  (e)  surplus, 
(f)  stock  certificate,  (g)  goodwill. 

June  1917 

1.  The  Morgan  Mitchell  Company  manufacture  doors, 
sash  and  interior  woodwork.  They  operate  three  ledgers  ; 
namely,  customers',  creditors'  and  general.  Their  main 
cashbook  has  the  following  rulings :  left  page,  Net  Cash, 
Accounts  Receivable,  Interest  and  Discount,  General 
Ledger;  right  page,  Net  Cash,  x\ccounts  Payable,  Pur- 
chase Discount,  General  Ledger.  All  cash  receipts  are 
deposited  in  the  bank.  A  petty  cash  fund  of  $100  is 
maintained  from  which  all  currency  payments  are  made. 
These  payments  are  recorded  and  distributed  in  a  petty 
cashbook  with  special  columns.     At  the  end  of  each  week 


Questions  in  Advanced  Bookkeeping  75 

the  petty  cashbook  is  footed  and  closed  and  the  footings 
are  brought  into  the  main  cashbook. 

On  June  1,  1917,  the  amount  on  deposit  in  the  Bank  of 
the  Republic  is  $7643.28  and  the  petty  cash  fund  is  $100. 

(a)  Under  date  of  June  1,  1917,  enter  the  cash  balance 
in  a  cashbook  with  rulings  as  described  above,  (b) 
Make,  with  proper  explanations,  the  necessary  entries  for 
the  following  cash  transactions : 

June  1.  Paid  the  West  Virginia  Lumber  Co.  for  invoice 
of  May  18,  car  243,867,  $456.85,  less  2%  discount  and 
less  freight  $145.22. 

June  2.  Discounted  at  the  Bank  of  the  Republic  Brown 
Brothers'  two-months  note  of  May  29  for  $500  and  re- 
ceived credit  for  the  proceeds. 

June  2.  Received  of  the  Lawson  Contracting  Co.,  $450 
to  apply  on  account. 

June  2.  Drew  a  check  to  cover  the  weekly  pay  roll, 
$1864.95. 

June  2.  Drew  a  check  for  petty  cash  vouchers  $86.57, 
distributed  as  follows :  delivery  expense,  $34.25 ;  shop  ex- 
pense, $29.18;  office  expense,  $12.75;  selling  expense, 
$4.29;  accounts  receivable  (J.  &  M.  Parks),  $6.10. 

June  4.  Paid  the  Central  Railroad  Co.  their  weekly 
freight  account  $463.82.  This  payment  was  charged  as 
follows :  West  Virginia  Lumber  Co.,  car  243,867, 
$145.22;  Pacific  Lumber  Co.,  car  197,658,  $254.80;  Car- 
ter &  Williams,  car  251,897,  $63.80. 

June  6.  Paid  the  Bank  of  the  Republic  $1000  to  take 
up  the  Hudson  Contracting  Co.'s  two-months  note  of 
April  6  which  we  had  previously  discounted  and  which 
the  maker  is  unable  to  pay. 

June  6.  Received  of  the  Hudson  Contracting  Co.  their 


-6  Questions  in  Advanced  Bookkeeping 

two-months  note  for  $1000,  dated  to-day,  and  their  check 
for  two  months'  interest  on  that  amount. 

June  6.  Discounted  at  the  Bank  of  the  Republic  the 
Hudson  Contracting  Co.'s  note  of  June  6  for  $1000  and 
received  credit  for  the  proceeds. 

June  7.  Sold  James  Whitcomb  for  cash  an  invoice  ot 
lumber,  $35.46. 

June  7.  Gave  the  Richmond  Lumber  Co.  our  check  for 
invoice  of  May  18,  car  293,416,  $484.12,  less  3%  discount. 

June  9.  Drew  a  check  for  the  weekly  pay  roll,  $1871.40. 

June  9.  Drew  a  check  for  petty  cash  vouchers  $93.17, 
distributed  as  follows :  Delivery  expense,  $19.80 ;  shop 
expense,  $28.10;  office  expense,  $18.42;  selling  expense, 
$26.85. 

(c)  Summarize  and  close  the  cashbook  and  journalize 
the  summary  for  posting.     (Do  not  post.) 

2.  On  May  17,  1917,  C.  E.  Burns,  Binghamton,  N.  Y., 
owned  $1500  in  cash.  On  the  same  day  he  ordered  of  the 
Western  Grain  Co.,  Chicago,  111.,  1  car  fancy  clipped 
white  oats.  The  oats  were  shipped  May  23  and  arrived 
in  Binghamton  June  4.  The  invoice  weight  was  51,200 
lb.  net.  The  price  was  67^  a  bushel  (1  bu.=  32  lb.), 
f.  o.  b.  Binghamton,  and  the  terms  were  "  seller's  draft 
on  buyer  at  sight  with  documents  attached."  The 
freight,  at  15^  a  hundred,  was  paid  by  the  buyer  and 
charged  to  the  seller.  When  the  draft  was  presented  to 
Burns  May  28,  he  drew  his  check  on  the  Third  National 
Bank  of  Binghamton  for  the  amount  and  all  of  the  docu- 
ments were  delivered  to  him. 

Sales  were  made  by  Burns  from  the  carload  of  oats  as 
follows:  June  7,  500  bu.  @  85^;  June  10,  400  bu.  @ 
86^ ;  June  12,  800  lb.  @  $2.40  a  hundred,  all  for  cash. 
Expenses  were  paid  in  cash  as  follows :     June  4,  $5.65 ; 


Questions  in  Advanced  Bookkeeping  77 

June  10,  $6.40.  The  oats  unsold  June  13  were  inven- 
toried at  cost.  Set  up  and  close  the  following  ledger 
accounts :  Stock  of  oats,  Sales,  Expense,  Profit  and 
Loss,  C.  E.  Burns  and  Cash. 

3.  Show  the  entries  required  in  the  following: 

(a)  The  net  profit  of  a  corporation  is  $18,765.20.  The 
directors  have  declared  a  dividend  of  6%  on  a  capital 
stock  of  $100,000  and  have  agreed  to  carry  $10,000  to  the 
surplus  account,  (b)  Your  sales  for  the  period  just 
►  ended  amount  to  $47,568.12  and  you  wish  to  set  up  a 
reserve  for  bad  debts  of  1^2%  of  sales. 

4.  Discuss  the  method  of  financing  the  transaction  de- 
scribed in  question  2,  describe  the  documents  that  would 
accompany  the  seller's  draft  and  state  briefly  the  purpose 
of  each.  • 

5.  (a)  Write  the  draft  mentioned  in  question  2.  (b) 
Write  the  check  mentioned  in  question  2. 

6.  Reconcile  the  following  bank  account :  Balance 
per  check  book,  $972.13  ;  balance  per  pass  book,  $1986.24; 
checks  outstanding,  $324.89,  $63.14,  $263.84,  $73.28, 
$276.88 ;  items  not  entered  in  the  check  book,  interest  on 
bank  balance,  $14.23,  and  exchange  on  out  of  town 
$2.15. 

7.  P.  O.  Judson's  balance  sheet  Jan.  2,  1917,  showed 
the  following  assets  and  liabilities:  Cash,  $3465.40;  sal- 
aries and  wages  due  employees,  $1869.50;  accounts  re- 
ceivable, $4375.20;  notes  payable,  $7200;  accounts  pay- 
able, $1234.75;  merchandise  inventory,  $8145:  motor 
trucks,  $1265 ;  interest  accrued  on  notes  payable, 
$56.40. 

On  March  31,  1917,  Judson's  assets  and  liabilities  were 
as  follows  :  Cash,  $958.60  ;  accounts  payable,  $3978.84  : 
notes  payable,  $9675 ;  salaries  and  wrages  due  employees, 


j8  Questions  in  Advanced  Bookkeeping 

$345.50;  merchandise  inventory,  $9615;  accounts  receiv- 
able, $4314.25. 

Prepare  a  statement  to  show  Judson's  profit  or  loss. 

January  1918 

For  question  1  use  Journal  and  Cashbook.  The  columns  re- 
quired in  the  Journal  are  Accounts  Payable,  Dr.,  General,  Dr., 
Accounts  Receivable,  Cr.,  and  General,  Cr. 

The  columns  required  in  the  Cashbook  are  as  follows :  left 
side,  Net  Cash,  Accounts  Receivable,  Sales  Discount,  General; 
right  side,  Net  Cash,  Accounts  Payable,  Purchases  Discount, 
General. 

All  original  entries  must  contain  sufficient  explanation  to 
make  transactions  clear. 

1.  Make  the  necessary  entries  for  the  following  se- 
lected transactions  of  the  business  of  Hartley  Brothers, 
Inc.,  Yonkers,  N.  Y. 

July  1,  1917.  The  cash  account  in  the  general  ledger 
shows  a  balance  of  $1465.80. 

July  2.  Received  from  the  Cortland  Cement  Co.  1  car 
plaster,  invoice  dated  June  7,  terms  2/30,  %<»  $365.75. 

July  2.  Paid  the  New  York  Central  Railroad  Co. 
freight  on  the  Cortland  Cement  Co.'s  shipment  of  June  7, 
$60,  which,  according  to  the  terms  of  this  purchase,  is  to 
be  charged  to  the  Cortland  Cement  Co. 

July  3.  Paid  the  Virginia  Lumber  Co.  their  three 
months'  note  of  April  3,  $425,  with  interest  at  6%. 

Tuly  5.  Paid  the  Louisiana  Cypress  Co.  invoice  of  June 
26',  $212.56,  less  2%. 

July  5.  Paid  bill  of  June  15  for  stationery  $45.78. 

July  6.  Issued  check  for  weekly  pay  roll  $478.65. 

July  8.  Received  checks  in  settlement  of  the  following : 
Oliver  Davidson,  invoice  of  June  8,  $235,  less  2% ;  the 


Questions  in  Advan«^d  ,b:-OKK,--EniNG  79 

New  York  Construction  Co.,. invoice  of  June  29,  $342.60, 
less  3%  ;  Robert  W.  Manley  on  account  $250. 

July  8.  Paid  the  Cortland  Cement  Co.'s  invoice  of 
June  7. 

July  9.  Received  from  H.  Barber  &  Co.  their  60-day 
note,  dated  June  29,  for  invoice  of  that  date  $275. 

July  10.  Made  the  following  sales:  J.  H.  Case  &  Son, 
50  M  red  cedar  shingles  at  $4.45 ;  10,000  feet  N.  C.  pine 
at  $48  a  thousand,  terms  2/10,  n/30 ,'  the  Fairchild  Lumber 
Co.,  20  tons  marble  cement  at  $22.50,  terms  cash,  less  3%. 

July  11.  Received  from  the  Fairchild  Lumber  Co.  their 
check  for  invoice  of  July  10. 

July  12.  Received  from  the  Sullivan  Building  Co.  their 
60:day  interest-bearing  note  of  June  20,  for  invoice  of 
that  date  $245.50. 

July  13.  Gave  the  Tonawanda  Lumber  Co.  our  two 
months'  note,  dated  June  28,  for  invoice  of  that  date 
$454.50. 

July  13.  Issued  check  for  weekly  pay  roll  $465.25. 
Paid  postage,  car  fares  and  petty  expenses  $18.74. 

July  13.  Discounted  the  Sullivan  Building  Co.'s  note 
of  June  20  at  the  Bank  of  New  York  and  received  credit 
for  the  proceeds. 

July  15.  Received  through  the  First  National  Bank  the 
Louisiana  Cypress  Co.'s  invoice  of  July  1  for  $814.40, 
with  their  90-day  draft  of  the  same  date  and  amount, 
which  we  accepted. 

Rule  and  foot  the  cashbook  and  show  the  totals  in  the 
form  of  a  journal  entry.     Close  the  journal. 

2.  On  June  30,  1917,  the  ledger  accounts  of  Hill  &  Hale 
show  the  following  balances:  A.  W.  Hill  (capital) 
$6000:  A.  W.  Hill  (private)  $250:  E.  E.  Hale  (capital) 
$4000;  E.  E.  Hale  (private)  $175.35;  cash  $672.40;  ac- 


80  Questions  riN.  Advanced  Bookkeeping 

counts  receivable  $2 165.84.; -merchandise  inventory  (Dec. 
31,  1916)  $7787.11;  purchases  $8400;  sales  $12,560.50; 
returned  sales  $250;  traffic  equipment  $1400;  notes  pay- 
able $500 ;  rent  $600 ;  inward  freight  and  express  $312.60 ; 
advertising  $200;  purchase  discount  $168.40;  expenses 
$1015.60. 

The  merchandise  inventory  on  June  30,  1917,  is  valued 
at  $8373.67 ;  the  unused  expense  items  amount  to  $38.20. 
It  is  estimated  that  traffic  equipment  has  depreciated  5% 
and  that  60%  of  the  advertising  cost  should  be  charged 
to  the  period  under  consideration.  Freight  bills  unpaid 
amount  to  $18.75  and  $5  interest  has  accrued  on  notes 
payable. 

(a)  Make  a  trial  balance  June  30,  1917.  (b)  Set  up 
and  close  all  accounts  involved  in  finding  the  profit  or  loss 
for  the  six  months  ending  June  30,  1917.  (c)  Prepare 
a  Profit  and  Loss  Statement  for  the  six  months  ending 
June  30,  1917. 

3.  (a)  Write  the  Sullivan  Building  Co.'s  note  which 
was  received  on  July  12  (question  1).  Make  it  payable 
at  the  Bank  of  the  Republic.  Show  the  necessary  in- 
dorsement on  this  note  when  it  was  discounted  on  July 
13.  (b)  Write  the  draft  mentioned  in  the  transaction  of 
July  15  (question  1),  and  show  Hartley  Brothers'  ac- 
ceptance. 

4.  Describe  some  plan  with  which  you  are  familiar 
for  handling  petty  cash  and  keeping  a  record  of  petty 
cash  transactions. 


The 


Progressive  Series 

Answers   in 
Advanced  Bookkeeping 


for 
DRILL,    TEST    AND    REVIEW 


By 

ISAAC  PRICE,  A.M. 

Washington  Irving  High  School. 
New  York  Evening  High  School  for  Men 


Author: 


"Direct  Method  of  Teaching  English  to  Foreigners,"  "Compre 
hensive  Question  and  Answer  Book,"  "Outlines 
in  American  History." 


HINDS,   HAYDEN  &  ELDREDGE,  Inc. 

NEW  YORK       CHICAGO       PHILADELPHIA 


Copyright,   191 8,  by 
HINDS,  HAYDEN  &  ELDREDGE,  INC. 


International   Copyright  Secured 


PREFACE. 


A  practical  Question  and  Answer  Book  should  be  com- 
prehensive in  scope  without  having  too  many  and  too  de- 
tailed questions.  It  should  furnish  abundant  material  for 
drill,  test,  and  review  of  the  subject  by  means  of  well 
arranged  and  well  graded  questions,  and  should  aim  to 
cultivate  in  the  student  those  qualities  brought  out  in  a 
good  recitation  by  a  skilled  teacher. 

With  these  objects  in  mind  this  series  of  books  has  been 
written.  The  separate  books  are  intended,  not  only 
for  beginners,  but  also  for  students  pursuing  advanced 
and  review  work.  Care  has  been  taken  to  make  each  book 
complete.  The  papers  given  at  civil  service,  college  en- 
trance, and  Regents  examinations  have  been  carefully 
culled  for  suitable  questions,  and  the  material  arranged 
topically  and  logically  to  emphasize  principles  as  well  as 
essential  facts.  The  answers  are  supported  by  the  latest 
authorities  and  in  consonance  with  the  accepted  texts  for 
the  best  elementary  and  secondary  schools.  To  make  the 
work  more  helpful,  diagrams,  illustrations,  maps,  topical 
outlines,  and  glossaries  have  been  included. 

Acknowledgment  is  due  to  the  many  experienced  teach- 
ers who  have  freely  offered  suggestions  and  criticisms  de- 
signed to  make  this  a  most  helpful  "text -book." 


The  theory  and  practice  of  Advanced  Bookkeeping  and  Office 
Practice  is  presented  in  this  book.  The  first  section  is  devoted 
to  the  theory  and  the  descriptive  features,  while  the  Regents 
Questions  for  the  past  several  years  are  found  in  the  latter 
half.  The  latest  texts  and  authorities,  as  well  as  a  number  of 
teachers  in  the  New  York  City  High  Schools,  have  been  con- 
sulted by  the  author,  who  desires  to  express  his  indebtedness  to 
them  for  their  kindly  aid  and  assistance. 


To  My  Son 

LEONARD 

whose  questions 
come  from  the  mind  and 

the  heart 
this  series  is  affectionately 

DEDICATED 


BOOKKEEPING  TERMS  AND  THEIR  EQUIVALENTS  IN 

ACCOUNTING  PRACTICE 


Open  an  account 

Make  an  entry 

Resources 

Gains 

Loss  &  Gain  Account 

Business  Statement 
Loss  &  Gain  Statement 

Financial  Statement; 
Statement  of  Resources 
and  Liabilities 


Set  up  an  account 
Frame  an  entry- 
Assets 
Profits 
Profit  &  Loss  Account 

f  Statement  of  Income, 
Profit  &  Loss;  Trading 
Statement 

Balance  Sheet ; 
Statement  of  Assets 
and  Liabilities. 


Answers  in  Advanced  Bookkeeping 

1.  Bookkeeping  is  the  proper  classifying  and  recording  of  the 
facts  and  transactions  of  a  business. 

2.  The  business  man  or  firm  should  be  able  to  know,  within  a 
reasonably  short  time,  his  exact  and  accurate  financial  condition. 
He  should  be  able  to  ascertain  whether  he  is  gaining  or  losing 
money,  whether  he  is  overbuying,  whether  he  is  selling  his  stock 
at  the  right  price,  whether  he  is  making  a  reasonable  profit,  he 
should  be  able  to  make  comparisons  and  tell  differences,  etc.  So 
many  firms,  even  in  times  of  greatest  prosperity,  are  unable  to 
determine,  until  too  late,  their  exact  financial  condition.  His 
books  should  also  show  the  probable  outcome  of  future  opera- 
tions based  on  similar  operations  of  the  past. 

3.  A  business  transaction  is  an  exchange  of  values,  the  val- 
ues not  necessarily  being  money,  but  they  may  be  in  terms  of 
money  —  that  is,  upon  a  common  basis.  One  person  (or  firm) 
receives  something  of  value  from  another  for  which  he  gives 
something  of  value  in  exchange. 

4.  In  two  ways;  the  business  receives  and  it  gives.  See  An- 
swer 3.  There  are  one  or  more  debits  and  one  or  more  credits 
involved  in  each  transaction. 

5.  (a)  A  debit  is  a  representation  of  value  received  by  the 
account  under  which  the  debit  is  placed.  It  is  generally  an 
amount  due  the  business,  or  the  value  or  amount  of.  a  thing  or 
service  received,  (b)  A  credit  is  a  representation  of  a  value 
given  away  or  disposed  of.  It  is  an  amount  owed  to  others  by 
the  business  or  the  amount  or  value  of  a  thing  or  service  given. 

(c)  A  debtor  (Dr.)   is  any  person  owing  value  to  others,  while 

(d)  a  creditor  (Cr.)  is  one  to  whom  value  is  owing.  Debit  and 
credit  can  be  used  only  in  connection  with  accounts,  while  debtor 
and  creditor  are  used  to  refer  to  persons  or  their  representatives. 

6.  An  account  is  a  systematic  collection  of  debit  and  credit 
items  of  the  same  nature  and  class  under  one  heading  in  a  book 
of  accounts,  making  easier  the  arithmetical  determination  of  the 
value  of  the  account.  Custom  has  arranged  that  all  debit  items 
are  placed  on  the  left-hand  side  and  the  credit  items  on  the  right- 

107 


io8 


Answers  in  Advanced  Bookkeeping 


hand    side   of   the   ledger   accounts.     These   items   are   thus   ar- 
ranged in  the  most  convenient  form  for  solution. 

7.  (a)  Opening  an  account  consists,  first,  in  writing  the  name 
or  title  at  the  top  of  the  page  or  space  for  the  account.  The 
initial  entry  is  to  be  made  according  to  circumstances,  (b)  Clos- 
ing an  account  is  making  it  show  at  a  glance  its  relation  to  the 
business,  whether  a  gain  or  a  loss,  or  whether  a  resource  or  a 
liability.     See  Answers  90  and  97. 

8.  (a)  Real  accounts  are  those  accounts  which  show  financial 
condition,  while  (b)  nominal  accounts  reflect  the  changes  in 
financial  condition,  and  close  out  periodically  into  profit  and  loss ; 
that  is,  they  contribute  more  directly  to  the  profit  or  loss  of  an 
enterprise.  They  may  be  subdivided  according  to  the  nature  of 
the  business  into  (1)  Trading,  (2)  Manufacturing,  and  (3)  Profit 
and  Loss  (Loss  and  Gain)  accounts. 

9.  A  personal  account  is  an  account  standing  in  the  name  of 
a  person  or  group  of  persons  or  representatives  of  persons. 

10.  REAL   ACCOUNTS 


Assets 

Cash  in  Bank, 

Cash   (Petty), 

Securities    (Stocks,    Bonds, 
etc.), 

Notes  Receivable, 

Accounts   Receivable    (Con- 
trol), 

Inventory,  Merchandise, 

Inventory,  Furniture  and  Fix- 
tures, 

Real  Estate, 

Good  Will. 

NOMINAL  ACCOUNTS 


Liabilities 
Notes  Payable, 
Accounts  Payable  (Control), 
Capital  (or  Proprietors'  Ac- 
counts). 


Manufacturing  Account: 
Material  Used, 
Supplies  Used, 
Factory  Wages, 
Factory  Expense. 
Trading  Accounts: 
Merchandise  Sales, 
Sales  Allowances, 
Sales  Discount, 
Freight  Outward, 
Manufacturing   Cost, 
Merchandise  Inventory  and 
Purchases, 


Purchase  Returns, 
Purchase  Discount, 
Freight  Inward, 
Advertising  Expense, 
Selling  Expense,      » 
Delivery  Expense, 
Office  Expense, 
General  Expense. 
Profit  and  Loss-' 

Bank  Interest  and  Discount 
Bad  Debts. 


Answers  in  Advanced  Bookkeeping  109 

11.  See  Answer  10,  Nominal  Accounts.  The  trading  accounts 
are  those  in  which  are  recorded  the  various  items  entering  into 
the  cost  of  the  merchandise  and  those  concerned  with  the  re- 
turns from  the  merchandise  sold.  From  these  accounts  the  trad- 
ing statement  is  made  up.     See  Answers  93  and  94. 

12.  Loss  and  Gain,  or  Profit  and  Loss. 

13.  See  Answer  10,  Nominal  Accounts. 

14.  A  controlling  account  is  an  account  in  the  general  ledger 
that  summarizes  the  total  of  a  class  of  accounts  in  another  or 
subsidiary  ledger. 

15.  A  suspense  account  is  an  account  into  which  all  items  of 
a  doubtful  nature  are  placed  until  their  final  disposition  is  de- 
termined upon.  It  is  not  the  account  for  losses  from  bad  debts, 
etc. 

16.  (a)  An  original  entry  is  the  first  written  record  made  of 
any  transaction.  It  should  be  made  at  the  time  of  the  trans- 
action or  with  the  least  possible  delay,  (b)  An  adjustment  entry 
is  one  which  corrects  an  improper  entry  previously  made,  and, 
at  the  same  time,  makes  the  proper  entry. 

17.  (a)  Cash  $150. 

Merchandise  »       $150. 

(b)  Cash  250. 

Notes  Receivable  750. 

Merchandise  1000. 

See  Answers  to  Regents  Questions  for  numerous  other  illus- 
trations. 

18.  Books  of  original  entry  are  those  in  which  the  first  writ- 
ten records  of  a  business  transaction  are  made.  They  are  im- 
portant because  they  are  the  only  ones  generally  allowed  as  evi- 
dence in  court,  and  supply  the  items  from  which  the  other  books 
are  made  up.  so  that  in  case  of  loss  or  fire  the  secondary  books 
could  be  written  up  from  these  books.  Errors  in  original  books 
of  entry,  or  in  any  bookkeeping  books,  should  be  indicated  by 
the  word  "  void "  written  in  red  ink  and  a  red  line  drawn 
through  the  entry.  Under  no  circumstances  should  erasures  be 
made  in  any  book  of  record. 

19.  (a)  The  Principal  Books  of  account  are  those  from  which 
or  to  which  posting  is  done.  They  are  the  Journal,  the  Cash 
Book,  the  Sales  Book,  the  Invoice  or  Purchase  Book,  and  the 


no  Answers  in  Advanced  Bookkeeping 

Ledger.  Where  other  books  are  kept  from  which  posting  is 
done  they  are  also  principal  books,  (b)  An  Auxiliary  Book  is 
one  in  which  neither  a  debit  nor  a  credit  is  recorded,  but  which 
contains  and  supplies  the  details  to  make  clearer  certain  postings. 
They  are  the  Check  Book,  the  Bill  Books,  the  Stock  Books,  the 
Time  Books,  etc. 

20.  The  Daybook  is  a  complete  record  of  the  daily  transac- 
tions of  a  business.  The  Daybook,  per  se,  is  seldom  kept  in  any 
business  house.     See  Answer  22. 

NEW  YORK,  DECEMBER  23,  1917 


Mo.    Day        History    of    the    transactions        Items        Totals 

21.  The  Journal  is  the  book  in  which  the  debits  and  the  cred- 
its are  originally  and  properly  classified  with  a  view  to  their 
being  transferred  to  the  ultimate  books  of  record.  Many  firms 
do  not  use  the  Journal  except  for  the  classification  of  the  debits 
and  credits  in  involved  transactions,  the  simpler  transactions  be- 
ing immediately  and  directly  posted  under  their  proper  accounts 
from  the  original  books  of  record.  It  may  include  special  col- 
umns for  different  purposes  (the  six-column  journal)  and  its 
use  depends  entirely  upon  the  business  itself. 

CHICAGO,  SEPTEMBER  19,  1918 


Mo.   Day    Name  of        Name  of  Thing  L  R    Value      Value 

Thing  ,-. 

or  Service       %  SerV'CG,  Received  Given  Out 

^      .      ,  Given   Out 

Received 

Cash  4.  91. 

Mdse.  •  7.  91. 

22.  The  Daybook-Journal,  or  Journal-Daybook,  is  a  combina- 
tion of  the  Daybook  and  the  Journal  (for  all  those  transactions 
which  are  journalized,  the  transactions  not  journalized  being 
found  in  the  other  original  books  of  entry  which  are  really  day- 
books) and  is  used  to  record  all  those  transactions.  This  book 
is  used  wherever  journalizing  is  required  in  the  questions 
throughout  this  book,  unless  otherwise  stated.  See  Answers  and 
Regents  Questions. 


Answers  in  Advanced  Bookkeeping 


hi 


MARCH  1.  1917 


I,    Martin    Simon,    began   business,    in- 
vesting cash,  $5000.00. 
1     Cash  Investment  5000. 

1        Martin  Simon  5000. 

1 
Expense  Rent    for    March  100. 

Cash  100. 


Mdse. 
Cash 


L.  Whitman  &  Co. 


1650.56 


1650.56 


Cash 
Mdse. 


R.   C.   Wilson 
Invoice 


114.76 


114.76 


Martin  &  Ray 
Mdse. 


Sold  on  acct. 


509.24 


509.24 


23.  The  Cashbook  is  used  instead  of  the  Cash  Account  in  the 
Ledger  for  the  entry  of  all  details  regarding  the  receipt  and 
disbursement  of  cash.  It  contains  a  complete  record  of  all  the 
cash  receipts  and  disbursements,  showing  the  respective  accounts 
to  be  credited  or  debited,  with  a  brief  explanatory  statement. 
The  balance  shows  the  difference  between  the  receipts  and  the 
expenditures  shows  the  amount  of  cash  on  hand  (in  safe,  drawer 
and  bank).  The  book  should  be  balanced  daily,  or  at  least 
weekly  or  monthly. 


CASH  ACCOUNT 


Mo. 

Day 

Cash 

365. 

Mo. 

Dav 

Cash 

250. 

Received 

450. 

Paid  Out 

300. 

Difference 

or  Cash  on 

hand,  a 

Resource 

H2  Answers  in  Advanced  Bookkeeping 

debit  side,  cash  book        CASH  RECEIPTS 


Balance              Cash  on  hand 

3567.23 

May 

1 

Henry  Smith    On  account 

189.15 

2 

W.  B.  Imlay     Bill  Feb.  20, 

250. 

Bway.  Dept.  Store  Bills,  Jan. 

1543.89 

4 

Notes  Receiv.  Jameson  &  Co.  note 

150. 

Interest             3-mo.  J.  &  Co.  note 

2.25 

5 

Sales                  Cash  Sales 

350.76 

21 

Notes  Receiv.   Wilkins  Brothers 

98. 

Interest             60-day  W.  B.  note 

.98 

24 

Notes  Pay.        Borrowed  on  6-mo.  note  1000. 

7152.26 

June 

1 

Balance             Cash  on  hand 

1546.75 

CASH  DISBURSEMENTS     credit 

side,  cash  book 

May 

3 

Saml.   Eisen      Bills  April 

1256. 

Expenses           Advertising 

11.45 

6 

Williams  Co.    Bill,  March  4, 

87.50 

7 

Notes  Payable  Favor.  Hull  &  Griooen 

1250. 

Interest  Note,  H.  &  G.-3-mo. 

10    Expenses  Stationery,  etc. 

Fixtures  Showcases 

Sales  Expenses  Salesmen's  expenses 

25  Purchases 

26  Murray  &  Co.  Bills   March 

27  Salaries  May 
31     Balance 


3.75 

25.50 

'110. 

150. 

25.67 

550. 

2135.38 

1546.75 

7152.26 


24.  The  Sales  Book  is  the  record  book  for  all  sales  made, 
whether  on  account  or  for  cash.  Cash  sales  or  sales  for  small 
amounts  for  which  no  bills  are  rendered,  are  generally  lumped 
together  as  one  entry.  The  record  shows  the  name  and  address 
of  the  buyer  or  purchaser,  the  terms  of  sale,  the  detailed  items, 
the  prices  and  the  total  amount  of  goods  sold  sale.  The  book  is 
closed  at  least  monthly,  the  total  amount  of  sales  posted  to  the 
Sales  Account  in  the  Ledger.  The  goods  are  said  to  be  charged 
when  they  are  entered  in  the  Sales  Book. 


answers  in  Advanced  Bookkeeping  113 


• 


MODEL  SALES  BOOK  NOVEMBER  12,  1919. 

Broadway  Dept.  Store 
8/10,  7/10-oOx 
165    20  doz.  collars 
98     10    M     scarfs 
198x      6  yd.   pleatings  1.  6.  96. 


Oakland,  Cal. 

2. 

40. 

5. 

50. 

1. 

6. 

Boston,  Mass. 

2. 

150. 

3. 

300. 

-13- 

Jordan.  Marsh  &  Co. 
reg. 

195     75  doz.  collars,  spec, 
job  100    "  "  3.  300.  450. 

25.  In  the  Ledger  are  found  the  accounts  under  which  the 
various  charges  and  credits  are  systematized.  From  it  the  Trial 
Balance  is  taken,  and  from  it  the  various  Trading  and  Financial 
statements  are  prepared.  The  accounts  in  the  Ledger  should  be 
arranged  in  the  following  order,  if  only  one  book  is  used:  (a) 
General  Accounts,  (b)  Accounts  with  trade  creditors,  and  (c) 
Accounts  with  trade  debtors,  allotting  to  each  class  such  space  in 
the  book  as  may  be  found  necessary.  The  general  accounts 
should  be  arranged  in  logical  order,  while  the  other  accounts 
should  be  arranged  alphabetically,  using  preferably  a  loose-leaf 
ledger.  Where  the  volume  of  business  permits,  it  is  advisable 
to  use  three  ledgers,  a  General  Ledger,  a  Purchase  Ledger,  and 
a  Sales  Ledger,  keeping  Controlling  Accounts  of  the  purchase  and 
the  sales  ledger  in  the  general  ledger.  The  balances  of  the  Pur- 
chase Ledger  and  the  Sales  Ledger,  or  of  these  sections  in  the 
one-book  Ledger,  must  agree  with  the  balances  of  the  Accounts 
Payable  Account  and  the  Accounts  Receivable  Account.  Post- 
ing to  the  Ledger  therefore  must  come  from  one  of  the  follow- 
ing sources  —  the  Cash  Book,  the  Journal,  the  Invoice  or  Pur- 
chase Book,  or  the  Sales  Book  and  such  other  books  as  are 
used  from  which  it  is  intended  to  post  directly  without  the  in- 
termediate use  of  the  Journal. 

26.  The  Invoice  or  Purchase  Book  varies  with  the  business, 
and  is  usually  footed  at  the  end  of  each  Trial  Balance  period. 
It  may  be  merely  a  book  with  columns  in  which  all  the  essential 
data  in  connection  with  the  invoice  may  be  entered,  or  it  may  be 
a  book  in  which  the  invoices  are  pasted  and  the  total  extended  to 


ii4  Answers  in  Advanced  Bookkeeping 

the  proper  columns.  The  first  form  is  to  be  preferred.  When 
this  is  followed  the  invoices  should  be  filed  after  the  items  have 
been  entered  in  the  proper  columns.  The  following  are  the 
headings  in  a  model  book:  Date,  Firm  from  whom  goods  are 
purchased,  Address,  Terms,  Amount,  Ledger  Folio  or  LF,  and 
Remarks. 

27.  The  Bill  or  Notes  Book  contains  rulings  for  the  entry 
of  the  details  of  all  notes  issued  and  received,  as  well  as  all 
acceptances.  This  book  may  be  used  as  a  principal  book,  in  which 
case  the  posting  is  done  directly  to  the  Ledger. 

28.  By  journalizing  is  meant  the  proper  systematic  classifica- 
tion of  debits  and  credits  of  business  transactions.  When  the 
Cashbook  and  the  Purchase  and  Sales  Books  are  used,  only 
those  transactions  that  do  not  affect  these  books  are  journalized. 

29.  The  general  principle  for  journalising  is:  Debit,  under 
correct  and  appropriate  names,  all  values  or  their  equivalents 
received  by  the  business;  Credit  all  values  that  are  given  out  by 
the  business  and  that  which  returns  value  to  the  business. 

30.  By  posting  is  meant  the  transfer  of  the  debits  and  cred- 
its to  their  proper  accounts  in  the  Ledger.  Posting  to  the 
Ledger  must  therefore  come  from  a  principal  book. 

31.  (a)  By  charging  is  generally  meant  the  entering  of  sales 
in  the  proper  debit  columns  of  the  Ledger  accounts;  it  also  in 
general  means  to  debit  an  account,  (b)  Crediting  is  the  oppo- 
site of  charging  and  means  the  entering  of  the  item  on  the 
credit  side  of  the  account. 

32.  A  Customer  s  Ledger  is  a  subsidiary  ledger  in  which  the 
accounts  of  the  customers  of  the  business  are  kept,  that  is,  the 
accounts  to  which  all  sales  are  posted;  this  book  contains  the 
Accounts  Receivable. 

33.  Cash  includes  specie,  checks,  bank  drafts,  cashier's  checks 
or  drafts,  money  order,  sight  or  demand  drafts  and  whatever 
else  is  given  or  received  as  money.  The  Cash  Account  shows 
the  amount  of  cash  on  hand.  It  is  seldom  kept  in  the  Ledger 
except  as  a  controlling  account,  but  is  generally  kept  in  the 
Cashbook.     See  Answer  23. 

34.  (a)  Petty  cash  disbursements,  such  as  car  tickets,  tele- 
grams and  other  minor  items  for  which  it  is  not  expedient  or 
advisable  to  draw  checks,  should  be  handled  as  follows:  A 
check  should  be  drawn  for  an  amount  sufficient  to  cover  these 


Answers  in  Advanced  Bookkeeping  115 

disbursements  for  a  definite  period.  At  the  end  of  the  period 
or  when  the  amount  is  exhausted  the  total  of  the  expenditures 
should  be  entered  in  the  Imprest  Fund  Account,  (b)  The  im- 
prest fund  or  account  is  the  amount  drawn  to  meet  the  petty 
cash  disbursements  mentioned  in    (a). 

PETTY  CASH   (IMPREST  FUND) 


Mar.      1 

Balance 

Check  No. 

348 

100. 

3 

Expense 

Postage 

10. 

6 

Expense 

Telegrams 

4. 

7 

Expense 

Carfares 

.50 

11 

Expense 

Stationery 

16.50 

26 

Expense 

Postage 

10. 

28 

Expense 

Carfares 

1. 

31 

Balance 
Balance 

In  Drawer 
Forwarded 

58. 

LOO. 

58. 

100. 

Apr.       1 

35.  (a)  Merchandise  is  the  name  given  to  all  goods,  wares, 
commodities  that  a  merchant  buys  and  sells,  that  he  handles  in 
his  business  dealings  and  transactions,  and  on  which  he  expects 
to  make  a  profit,  (b)  The  Merchandise  Account  or  Trading 
Account  is  generally  used  as  a  controlling  account.  The  object 
of  this  account  is  to  show  the  loss  or  gain  on  the  commodities 
with  which  the  merchant  deals ;  it  shows  the  cost  of  the  goods 
and  the  value  of  the  goods  sold. 

36.  Expense  is  the  general  name  given  to  all  those  things  or 
services  necessary  to  the  proper  conduct  and  running  of  the 
business  and  which  are  not  sold  for  profit.  It  includes  such 
items  as  rent,  fuel  and  lighting,  postage,  telephone  and  telegraph 
disbursements,  etc.  The  values  received  in  exchange  for  the 
disbursements  for  these  items  are  entered  under  the  general  name 
of  expense.  Where  the  expenditures  form  an  appreciable  amount, 
or  where  it  is  desired  to  know  exactly  how  much  is  expended 
for  each  thing  or  service  in  order  to  figure  burden  or  overhead, 
or  costs,  it  is  customary  to  open  separate  accounts  for  those. 
This  plan  has  generally  been  followed  in  this  book. 

37.  (a)  Cash  is  debited  for  its  receipts:  for  the  amount  of 
cash   invested   in   the  business   and    for   all   cash   received    from 


n6  Answers  in  Advanced  Bookkeeping 

all  sources,  (b)  Credit  the  Cash  Account  for  all  cash  paid  out, 
no  matter  for  what  purpose:  loans,  checks,  etc.  (c)  The  busi- 
ness cannot  give  more  cash  than  it  has  received.  Over- 
drafts in  the  bank  account  are  not  honored  by  the  bank  and 
cannot,  therefore,  be  regarded  as  bona  fide  cash  disbursements. 
38.  (a)  Personal  Accounts  are  debited  or  charged  whenever 
the  person  in  whose  name  they  stand  receive  some  value:  as, 
(1)  For  all  merchandise  sold  to  them  on  account:  (2)  For  all 
moneys  received  by  them,  as  loans,  as  receipts,  as  payments,  from 
us  or  through  us;  (3)  For  all  debts  owing  to  us  at  the  begin- 
ning of  business;  (4)  For  all  merchandise  returned  to  them  or 
sold  to  them ;  (5)  For  all  notes  payable  in  their  favor ;  (6)  For 
notes  and  acceptances  of  others  transferred  by  us  to  them  on  ac- 
count; (7)  For  all  allowances  made  to  us:  rebates,  shortages, 
damages,  overcharges,  etc.;  (8)  For  allowances  made  in  settle- 
ment of  an  account  due  them  by  us.  (b)  Personal  Accounts  are 
credited  whenever  they  give  values:  as,  (1)  For  all  merchandise 
sold  by  them  to  us  on  account;  (2)  For  all  moneys  lent  by  them 
to  us,  or  paid  by  them  to  us;  (3)  For  all  debts  owing  to  them 
by  us  at  the  beginning  of  business ;  (4)  For  all  merchandise  re- 
turned by  them  to  us  or  sold  by  them  to  us,  on  account;  (5) 
For  all  notes  receivable  in  our  favor;  (6)  For  all  notes  and 
acceptances  of  others  transferred  to  us  by  them  on  account;  (7) 
For  all  allowances  made  to  them:  rebates,  shortages,  damages, 
overcharges,  etc. ;  (8)  For  allowances  made  by  us  in  settlement 
of  their  account  in  full. 

PERSONAL  ACCOUNTS 
JAMES  LANGER  HENRY  FRANKLIN 


Paid  him  Bought  from 

on  account  him  on  acct. 

or  or 

Sold  to  him  Paid  cash  or 

on  account  Received  from 

him  on  account. 

Bt.  from  him  on  acct.  Sold  him  on  account 

Paid  him  Paid  by  hiin  on  acct. 

Difference,  a  Difference,  a 

Liability  —  you    owe   to  him          Resource  —  owing  to  you 


Answers  in  Advanced  Bookkeeping  117 

39.  (a)  Expense  is  debited  for  all  expenditures  or  disburse- 
ments necessary  for  the  running  of  and  incurred  by  the  business. 
See  Answer  36.  (b)  The  account  is  credited  for  all  moneys  or 
values  received  from  others  for  expenses.  The  difference  is  a 
Loss. 

EXPENSE 

Expense   incurred  Expenses  reed. 

by  you  from  others 

Expenses  incurred  by  you 

Expenses   received  by  you 

Difference,  a 

Loss 

40.  (a)  Merchandise  is  debited  for  all  goods  invested  at  the 
beginning  of  the  business  (inventory),  goods  bought  and  goods 
returned  (unless  a  separate  account  is  kept  for  this  purpose). 
(b)  The  account  is  credited  for  all  goods  sold.  The  difference 
is  a  Gain  or  Profit. 

MERCHANDISE 

Mo.    Day     Value  of  750.      Mo.    Day 

goods  85. 

bought 
Difference, 
GAIN 

41.  Since  the  main  object  of  the  Merchandise  Account  or 
Trading  Account  is  to  show  the  loss  or  the  gain  on  the  goods 
with  which  the  merchant  deals,  it  is  necessary  to  know  the  cost 
of  these  goods.  The  cost  thus  includes  the  cartage,  drayage,  or 
freightage.     See   Answer   61. 

42.  (a)  This  account  is  debited  or  charged  with  all  notes, 
time  drafts,  and  acceptances  held  against  others;  i.e.,  when  issued 
by  others  and  accepted  by  us.  (b)  It  is  credited  when  the  notes 
are  paid  or  otherwise  disposed  of.  The  balance  will  show  the 
uncollected  notes  issued  by  others,  and  is  a  Resource. 


Value   of 

365. 

goods 

450. 

sold 

500, 

n8 


Answers  in  Advanced  Bookkeeping 


NOTES  (BILLS)   RECEIVABLE 


Vv  ntten  promises  01 
others  reed. 

Value  of   Notes  received 
Value  of  Notes  settled 
Difference,  owing  to  you,  a 
Resource  or  Asset 


Written  promises  of 
others  paid  or  settled. 


NOTES  RECEIVABLE 


Mar. 

16 

Apr. 

10 

July 

6 

Nov. 

24 

Jan. 

1 

43. 

(a: 

Balance 


500. 

Apr. 

16 

1050. 

Sep. 

7 

987. 

Nov. 

14 

2114.87 

Dec. 

31 

4651.8/ 

Balance 


500. 

987. 
1050. 
2114.87 

4651.87 


2114.87 


The  Accounts  Receivable  Account  (Personal  Ac- 
counts, or  Personal  Accounts  Receivable)  is  the  controlling  ac- 
count in  the  Ledger  for  all  the  Accounts  Receivable  or  Personal 
Accounts  in  the  subsidiary  or  Customer's  Ledger.  Accounts  Re- 
ceivable, the  individual  accounts,  are  the  accounts  with  individ- 
uals, firms,  or  corporations  to  whom  we  sell  goods,  (b)  Charge 
this  account  with  the  total  of  the  charges  of  the  month.  The 
individual  accounts  are  debited  for  all  goods  sold  by  us  to  them, 
(c)  The  account  is  credited  with  the  cash  payments  by  custom- 
ers, taken  from  the  Cash  Book  at  the  end  of  the  month,  and  with 
notes  receivable,  returns,  discounts,  allowances,  rebates.  The 
individual  accounts  are  likewise  credited  for  the  various  items 
in  the  preceding.  The  balance  of  the  account  must  agree  with 
the  sum  of  the  balances  of  the  individual  accounts  of  the  trade 
customers.     The  balance  is  an  Asset  or  Resource. 

ACCOUNTS  RECEIVABLE 


Dec.     1     Balance 

1/90.65 

Dec. 

15     Mdse.  rtd.18 

271.16 

31     Sales     S  65 

13315.07 

31     All'n'c's    19 
Cash     C  87 

100.15 
11419.34 

Balance 

3315.07 

15105.72 

15105.72 

Jan.     1     Balance 


3315.07 


Answers  in  Advanced  Bookkeeping  119 

44.  (a)  This  account  is  to  provide  a  means  for  offsetting  in 
the  bookkeeping  work  the  differences  that  remain  when  balances 
of  personal  accounts  are  uncollectable.  (b)  The  account  is  deb- 
ited with  the  amounts  of  the  balances  of  the  personal  accounts 
when  hope  of  collection  is  abandoned,  and  it  is  credited  with  an 
estimated  amount,  based  on  the  amount  of  the  charge  sales,  suffi- 
cient to  provide  for  losses. 

45.  Charge  the  account  with  all  insurance  —  fire,  burglary, 
plate  glass,  fidelity,  liability,  bad  debts,  etc.  At  the  end  of  each 
month  charge  the  proper  accounts  (Insurance  on  Stock  and 
Equipment,  etc.)  with  their  proportion,  the  balance  being  an 
asset  as  "  Prepaid  Insurance." 

46.  Charge  this  account  at  the  end  of  the  period  with  all 
accrued  interest  (not  yet  paid)  on  notes,  etc.,  due  from  others, 
crediting  "  Interest  Account."  When  the  interest  is  received  it 
is  credited  to  "  Accrued  Interest  Receivable." 

47.  Charge  this  account  (Store  Property  Account.  Factory 
Property  Account,  Office  Property  Accowrt,  etc.)  with  the  pur- 
chase price  of  the  property.  Repairs,  unless  in  the  nature  of 
permanent  improvements,  are  not  to  be  charged  to  this  account. 
A  reasonable  amount  should  be  periodically  credited  to  "  Reserve 
for  Depreciation." 

48.  This  account  is  to  be  charged  with  the  value  of  all 
equipment  such  as  counters,  shelving,  scales,  measures,  etc.,  used 
in  the  conduct  of  the  business.  A  fair  amount  should  be  writ- 
ten off  periodically  for  depreciation. 

49.  This  account  (Store  Equipment,  Factory  Equipment,  Of- 
fice Equipment,  etc.)  is  to  be  charged  with  the  value  of  the 
equipment  and  appliances,  determined  from  the  invoices.  Pe- 
riodically, a  fair  amount  should  be  written  off  for  depreciation. 

50.  Charge  this  account  with  the  cost  of  the  automobiles, 
wagons,  other  vehicles,  horses  and  harness.  When  this  equip- 
ment is  sold,  the  account  is  to  be  credited  with  the  amount  of 
the  sale.  Do  not  charge  this  account  with  the  repairs  to  auto- 
mobiles and  wagons,  etc.,  horseshoeing,  or  anything  of  this  na- 
ture. These  expenditures  are  to  be  charged  to  the  Expense  Ac- 
count. A  fair  amount  is  to  be  written  off  periodically  for  de- 
preciation. 

51.  (a)  Xotes  Payable  Account  is  to  be  credited  with  all 
notes  given  by  us  to  trade  creditors,  to  banks,  or  to  others,  or 


120 


Answers  in  Advanced  Bookkeeping 


for  time  drafts  made  out  in  their  favor,  (b)  It  is  debited  with 
the  amounts  paid  in  settlement  of  the  notes  or  drafts.  The  bal- 
ance shows  the  amount  of  our  notes  or  time  drafts  outstanding 
and  should  correspond  with  the  balance  in  the  Notes  Payable 
section  in  the  Bill  Book.     The  balance,  if  any,  is  a  Liability. 

NOTES    (BILLS)    PAYABLE 


Our  written                                         Our   written 

promises  to                                         promises  to 

pay  redeemed                                     pay  issued 

Value  of  Notes  issued 

Value  of  Notes  redeemed 

Difference,  owing  to  others,  a 

Liability 

NOTES  PAYABLE 

Nov.   30                          C      197. 

Dec.    31                          C    3459. 

Balance                  120. 

Nov.    30 
Dec.    31 

NB     1378. 
NB     2398. 

3776. 

3776. 

Jan.       1     Balance 

120. 

52.  The  object  of  the  Notes  Payable  Account  is  to  show  the 
amount  owed  by  the  business  as  evidenced  by  its  written  obliga- 
tions in  the  form  of  notes  or  accepted  drafts.  The  account  is 
the  opposite  of  the  Notes  Receivable  Account. 

53.  (a)  Accounts  Payable  {Personal  Accounts,  or  Personal 
Accounts  Payable),  see  Answer  43.  This  account  is  credited 
with  the  value  of  the  merchandise  bought  on  account,  the  amount 
being  carried  to  this  account  monthly  from  the  total  of  the  In- 
voice or  Purchase  Book,  (b)  It  is  debited  with  all  merchan- 
dise returned,  reductions  (Journal),  cash  payments,  discounts 
(Discounts  on  Purchases),  (Cash  Book),  rebates,  allowances, 
reductions  (Journal  or  Ca^h  Book).  The  separate  or  individ- 
ual accounts  are  debited  and  credited  for  in  like  manner.  The 
balance  of  the  account  must  agree  with  the  sum  of  the  balances 
of  the  trade  creditors'  and  others'  accounts. 


Answers  in  Advanced  Bookkeeping  121 

ACCOUNTS  PAYABLE 


Dec.     1 

Mdse.   retd. 

508.19 

Dec. 

1     Balance 

1961.76 

21 

Allowances 

116.66 

Purchases 

6585.24 

31 

Cash 

692572 

31 

Balance 

996.43 

8547.00 

8547.00 

Jan.      1     Balance  996.43 

54.  The  Accrued  Interest  Payable  account  is  to  be  credited 
at  the  end  of  the  period  with  the  interest  accrued  (not  yet  paid) 
on  notes,  etc.,  due  others,  charging  "  Interest  Account."  When 
the  interest  is  paid  it  is  charged  to  Accrued  Interest  Payable. 

55.  (a)  Credit  the  Accrued  Salaries  Account  with  the  sal- 
aries and  wages  earned  and  unpaid  at  the  end  of  each  month, 
and  charge  the  proper  expense  accounts.  When  payment  is  made 
this  account  is  charged  and  closed  out,  and  the  balance  of  the 
pay  roll  is  charged  in  the  regular  way.  (b)  The  Accrued  Taxes 
Account  is  credited  with  the  taxes  due  up  to  the  end  of  the 
month,  charging  the  proportionate  amounts  to  the  accounts  in 
which  they  belong.  When  the  taxes  are  paid  this  account  will 
be  charged. 

56.  This  account  contains  the  record  of  the  withdrawals  of 
cash  not  including  salary,  such  as  withdrawals  for  home  ex- 
penses, for  clothing,  donations,  etc.  At  the  end  of  the  period 
the  amount  of  this  account  is  closed  into  the  Proprietor's  Cap- 
ital Account. 

ROSWELL  R.  FLOWER.  PERSONAL  ACCOUNT 

Mar.  31     Capital  a/c  1000. 


Jan.    13 

Cash 

100. 

24 

H 

250. 

Feb.    15 

Household 

458. 

Mar.     1 

Life  Ins. 

111. 

Gifts 

81. 
1000. 

1000. 


Mar.  31     Roswell   R.   Flower.   Capital   a/c  1000. 

Roswell  R.  Flower,   Personal  a/c  1000. 


122 


Answers  in  Advanced  Bookkeeping 


57.  When  a  mortgage  is  placed  upon  real  estate,  or  assumed 
at  the  time  of  purchase,  this  account  is  credited.  When  it  is 
paid,  it  is  charged  when  the  mortgage  is  paid. 

58.  This  account  represents  the  proprietor's  net  capital.  At 
the  end  of  the  period  the  net  profit  is  credited  to  this  account. 
The  amount  of  his  withdrawals  (Answer  56)  is  then  closed  into 
this  account.  The  balance  of  the  account  is  his  net  capital  at 
the  time  of  closing.  In  the  event  of  a  partnership  each  partner's 
net  capital  would  be  shown  in  his  respective  account  and  the  net 
profit  (or  loss)  carried  to  the  credit  (or  debit)  of  their  accounts 
in  agreed  proportions.  In  the  event  of  a  corporation  this  ac- 
count represents  the  amount  of  the  issued  capital  stock  and  the 
profit  or  loss  is  carried  to  "  Surplus  "  account. 


CAPITAL-PROPRIETOR-INVESTMENT 


Money  withdrawn 
or  received  from  the 

Money  invested 
in  the  Business 

Business 

Investment  plus  Net  Gain 
Money  withdrawn    (Loss) 
Difference, 

Present  Worth   or   Net   Insol- 
vency. 

ROSWELL  R.  FLOWER 

,  CAPITAL  ACCOUNT 

Apr.      1 

May   23 

Dec.   31 

31 

Owed  others         500. 
Withdrawn     C    980. 
Net  Loss         J    425. 
Net  capital          6000. 

7905. 

Apr.      1 
July     11 

Nov.     7 

Investment 

H 

M 

Net   Capital 
Net  Profit 

Net  Capital 

C  5000. 

C  2345. 

560. 

7905. 

Mar.  17 
31 
31 

Withdrawn            850. 

Personal    a/c      1000. 

Net  Capital         8650. 

10500. 

Jan.      1 
Mar.  31 

Apr.      1 

6000. 
4500. 

10500. 

8650. 

59.     The  Sales  Account  is  credited  with  the  total  sales  of  all 
merchandise,  the  charged  sales  being  taken  from  the  Sales  Book, 


Answers  in  Advanced  Bookkeeping 


123 


as  well  as  the  cash  sales.  Returns  should  be  debited  at  selling 
price  for  all  goods  returned  by  customers.  The  difference  in 
this  account  will  be  the  net  sales  which  is  transferred  to  the 
credit  of  Trading  Account. 


SALES 


Mar.  31     Goods  retd.       458.04 
Damaged  goods  56.24 


Overcharges 
Shortage 
Sales   Disct. 
Trading  a/c 


9.12 

11.45 

159.35 

5980.65 

6674.85 


Mar.  31     Sales 


6674.85 


6674.85 


60.  This  account  is  charged  with  all  allowances  and  rebates 
given  a  customer  not  contemplated  or  agreed  upon  at  the  time 
of  the  sale.  Allowances  and  rebates,  reductions,  etc.,  should 
not  be  charged  to  Sales,  but  closed  at  the  end  of  the  period  into 
Trading  Account. 

61.  Merchandise  Purchases  Account  is  charged  with  the  face 
of  the  invoices  of  merchandise  before  deducting  cash  discounts. 
The  account  is  also  charged  with  the  freight,  expressage,  dray- 
age  on  merchandise  purchased  when  no  separate  account  is 
utilized  for  this  purpose.  (See  Answer  41.)  Credit  the  ac- 
count with  any  returns  of  merchandise  made  to  seller  and  with 
any  allowances  for  defects  in  goods  received  from  manufacturer 
or  wholesaler.  The  balance  of  the  account  is  transferred  to  the 
debit  of  the  Trading  Account. 


PURCHASES 


Mar.  31     Commissions 

115. 

Mar. 

31 

Damaged 

Freight 

55.76 

goods 

245. 

Purchases 

4375.24 

Shortage 
Retd.  goods 
Overcharges 
Trading  a/c 

56.87 
98.11 
7.02 
4139. 

4546. 

4546. 

124  Answers  in  Advanced  Bookkeeping 

62.  (a)  Charge  this  account  with  the  salaries  of  the  man- 
agers, bookkeepers,  office  staff,  and  other  general  office  help  not 
otherwise  charged,  (b)  Charge  this  account  with  part  of  the 
salary  of  the  proprietor,  active  partner,  and  manager  or  buyer 
and  the  wages  of  the  office  staff  proportionate  to  the  time  of 
buying,  (c)  Charge  this  account  with  the  wages  and  other 
remunerations  of  sales  persons,  order  takers,  and  all  others  en- 
gaged in  selling,  both  as  regular  and  as  extra  force,  (d) 
Charge  this  account  with  the  regular  and  part  time  employees 
engaged  in  delivering,  and  with  the  part  of  the  wages  of  other 
employees,  whether  on  sales  force  or  office  force,  proportionate 
to  the  time  given  to  the  delivery  work. 

63.  (a)  Charge  this  account  with  the  traveling  expense  of 
buying  trips  and  other  expense  incurred  in  buying  (not  covered 
by  any  other  account),  (b)  Charge  this  account  with  the  cost 
of  the  wrapping  paper,  cartons,  twine,  salesmen's  order  books, 
and  all  other  items  of  direct  selling  expense  not  covered  by 
"Salaries  and  Wages  of  Sales  Force"  and  "Advertising."  (c) 
Charge  this  account  with  all  stable  and  garage  expense,  includ- 
ing all  repairs,  taxes,  licenses,  upkeep,  and  with  the  depreciation 
charged  on  the  delivery  equipment ;  also  charge  this  account  with 
the  payments  for  express,  parcel  post,  and  contract  delivery  serv- 
ice. 

64.  Charge  this  account  with  all  the  expenditures  for  adver- 
tising purposes,  such  as  space  in  newspapers  and  periodicals, 
space  on  street  cars,  etc.,  circulars  and  postage  thereon,  adver- 
tising novelties,  trading  stamps,  charitable  donations,  window 
display,  electric  signs,  etc. 

65.  Charge  this  account  with  purchases  of  stationery  of  all 
sorts,  account  books,  and  forms  (except  selling  and  stock  forms), 
typewriter  supplies,  printing  and  postage  (except  advertising), 
and  depreciation  on  office  equipment. 

66.  Charge  this  account  with  all  expense  of  insurance,  fire, 
burglary,  fidelity,  plate  glass,  employers'  liability,  and  other.  This 
account  is  not  to  be  charged  with  insurance  on  store  or  business 
property. 

67.  Charge  this  account  with  the  amount  that  has  been  re- 
served for  bad  debts.     See  Answer  44. 

68.  Charge  this  account  with  heat,  light,  repairs,  depreciation 


Ansv^ers  in  Advanced  Bookkeeping  125 

on  store  equipment,  and  with  any  items  that  cannot  be  charged 
directly  to  any  of  the  above  particular  accounts. 

69.  (a)  Charge  this  account  with  all  rents  paid.  If  the  store 
is  owned,  rent  should  be  charged  equivalent  to  the  amount  it 
could  be  rented  for  to  others,  crediting  "  Income  from  Other 
Sources'";  in  the  latter  event,  "Income  from  Other  Sources" 
should  be  charged  with  the  taxes,  insurance,  repairs,  and  depre- 
ciation on  the  store,  (b)  If  the  store  is  owned,  the  rent 'which 
has  been  charged  to  the  previous  (Rent)  account  should  be 
credited  to  this  account  and  it  should  be  charged  with  insur- 
ance, taxes,  depreciation,  and  repairs  on  store.  The  account  is 
closed  into  "  Profit  and  Loss." 

70.  This  account  shows  the  inventory  of  merchandise  at  open- 
ing and  is  not  touched  again  until  the  books  are  closed.  It  is 
then  charged  with  Merchandise  Purchases  (see  Answer  61),  and 
Sales  Allowances  (see  Answer  60),  and  credited  with  Sales  (see 
Answer  59).  The  inventory  at  closing  is  then  credited  and  the 
balance  will  show  the  gross  profit  on  trading.  The  gross  profit 
is  transferred  to  the  credit  of  the  "  Profit  and  Loss  Account." 
The  inventory  is  then  brought  down  as  a  new  balance. 

71.  Charge  this  account  with  the  balances  of  all  the  expense 
accounts,  and  credit  it  with  the  gross  profit  from  trading;  the 
difference  will  be  the  net  profit  or  loss,  which  is  closed  into 
the  proprietor's  capital  account ;  if  a  partnership,  to  the  partners' 
accounts,  according  to  their  several  interests,  and,  if  a  corpora- 

• 

tion,  to  the  surplus  account. 

72.  Charge  this  account  with  the  interest  paid,  and  credit  it 
with  all  the  interest  received  and  close  it  into  the  "  Profit  and 
Loss  Account." 

INTEREST 

Use  of   money  L'se  of  money 

received  by  you  —  received  by 

L'se  of  money  received  by  you      others  — 

LTse   of   money   received   by 

others 

Difference    (generally),   a 

Loss 


126  Answers  in  Advanced  Bookkeeping 

DISCOUNT 

Discount  Paid  Discount  Paid 

by  you    (Cost)  by  others 

Discount  paid  by  you  (Produced) 

Discount  paid  by  others 
Difference   (generally),  a 
Loss 

73.  (a)  Credit  this  account  with  all  cash  discount  taken  on 
purchases  of  merchandise.  The  account  is  closed  into  the 
"  Profit  and  Loss  Account."  (b)  Credit  this  account  with  all 
cash  discount  taken  on  sales  by  customers.  This  account  is 
closed  into  the  "  Profit  and  Loss  Account." 

74.  Credit  this  account  with  incidental  receipts  such  as  tolls 
from  telephone  pay  stations  in  store,  etc. 

75.  For  convenience  in  the  bookkeeping  and  accounting  work, 
the  personal  accounts  are  divided  into  the  two  classes,  (a)  Ac- 
counts Receivable  are  the  accounts  with  persons  to  whom  we  sell, 
and  usually  show  debit  balances,  which  are  resources  or  assets. 
The  balances  from  the  individual  accounts  are  transferred  to  the 
Accounts  Receivable  Account  in  the  Ledger,  (b)  Accounts  Pay- 
able are  those  personal  accounts  with  those  to  whom  we  sell  or 
who  buy  from  us.  They  show  credit  balances  and  are  therefore 
liabilities  of  the  business.     See  Answers  43  and  53. 

76.  (a)  Notes  (Bills)  Receivable  are  the  written  promises 
of  others  to  pay  us  a  certain  amount  of  money  at  a  certain  date, 
(b)  Notes  (Bills)  Payable  are  our  written  promises  to  pay  other 
persons  a  certain  amount  of  money  at  a  certain  time,  (c)  An 
accommodation  note  is  a  note  drawn  or  endorsed  for  the  benefit 
of  another  person  without  any  equivalent  consideration. 

77.  (a)  Net  Investment  is  the  original  investment  less  the 
withdrawals,  plus  additional  investments,  (b)  Average  Invest- 
ment is  the  average  amount  of  money  invested  considering  the 
investments,  the  withdrawals,  and  the  time  factor. 

78.  (a)  An  inventory  is  a  detailed  and  itemized  statement  or 
schedule  showing  the  assets  or  liabilities  of  certain  accounts. 
It  is  a  resource  or  a  liability  not  shown,  or  not  correctly  and 
exactly  shown,  from  the  items  in  the  ledger,  (b)  The  merchan- 
dise inventory  is  found  by  taking  the  value  of  the  stock  on  hand, 


Answers  in  Advanced  Bookkeeping  127 

determined  by  ascertaining  the  quality  of  goods  on  hand,  fig- 
ured at  its  cost  price,  adding  for  appreciation  in  value  since  pur- 
chase, or  deducting  for  depreciation  or  decline  in  value. 

79.  The  Merchandise  Inventory  is  entered  on  the  credit  side 
of  the  Merchandise  Account  when  that  account  is  to  be  closed; 
after  closing  it  therefore  appears  on  the  debit  side.  Other  in- 
ventories appear  in  their  respective  accounts  and  in  the  Trad- 
ing Statement. 

80.  See  Answer  78. 

81.  See  Answer  78. 

82.  On  the  Debit  Side  of  the  Merchandise  Account. 

83.  A  Trial  Balance  is  a  summary  or  analysis  of  the  Ledger 
Accounts  for  the  purpose  of  testing  the  correctness  and  accuracy 
of  the  posting.  The  two  forms  of  Trial  Balance  are  shown  in 
Answer  88. 

84.  If  the  Trial  Balance  by  Totals  is  used,  then  all  accounts 
are  taken;  if  the  Trial  Balance  by  Difference  is  taken,  then  only 
those  accounts  in  which  there  appears  a  difference  are  consid- 
ered ;  accounts  which  balance  are  not  considered. 

85.  In  double-entry  bookkeeping  each  amount  appears  twice, 
once  on  the  debit  side  of  an  account  and  once  on  the  credit  side 
of  an  account.  In  a  compound  entry,  the  sum  of  the  two  or 
more  entries  equals  the  sum  of  the  entry  or  entries  on  the  other 
side.  Therefore,  the  total  of  all  the  debits  should  equal  the  total 
of  all  the  credits. 

86.  First  —  Add  again  the  figures  in  the  Trial  Balance.  Sec- 
ond —  Go  over  the  Ledger  to  make  sure  that  each  account  is 
properly  added  and  the  correct  balance  struck.  Third  —  Deter- 
mine the  accuracy  of  the  additions  of  the  books  of  original  entry, 
and  check  the  totals  as  posted  to  the  Ledger.  Fourth  —  See  that 
each  item  in  the  books  of  original  entry  is  checked  as  having 
been  posted.  Fifth — If  any  item  in  the  books  of  original  entry 
is  the  same  as  the  difference,  trace  it  to  the  Ledger  and  see  that 
it  has  been  properly  posted.  Sixth  —  Check  the  Ledger  to  prove 
posting,  observing  (1)  that  the  amount  posted  is  correct,  (2) 
that  it  is  posted  to  the  proper  side  of  the  account;  (3)  that  it  is 
posted  to  the  right  account.  Seventh  —  If  the  amount  of  the 
discrepancy  is  divisible  by  two,  the  error  may  be  caused  by  a 
posting  to  the  wrong  side  of  the  account.  Eighth  —  If  divisible 
by  nine,  the  error  may  be  a  transposition  of  figures.     Ninth  — 


I28  Answers  in  Advanced  Bookkeeping 

If  the  difference  is  ten  cents,  one  dollar,  one  hundred  dollars 
or  a  like  amount,  the  error  is  apt  to  be  in  the  addition  or  sub- 
traction. Tenth  —  If  Cash  Account  is  not  carried  in  Ledger,  see 
that  balance  has  been  brought  from  the  Cash  Book.  Eleventh  — 
Bear  in  mind  that  the  previous  balance  may  have  "  balanced " 
because  of  an  error  and  the  present  difficulty  may  result  from 
such  a  condition. 

87.     No.     A  merchandise  credit  may  have  been  posted  to  the 
cash  (or  any  other  account)  credit.     See  Answer  86  (11). 


88.  TRIAL  BALANCE  BY  TOTALS 


Martin  Simon  &  Sons,  Inc.,  Invest. 

3000. 

Cash 

4500.56 

1765.76 

Merchandise 

2457.44 

2875.24 

Expense 

186.65 

Harry  B.  Maxwell,  Inc. 

560.35 

560.35 

Edw.  C.  Falk 

976.65 

C.  W.  Morse   Sons 

1473. 

Notes  Receivable 

750. 

250. 

Notes  Payable 

450. 

950. 

10378. 

10378. 

See  Trial  Balance  by  Differences 


TRIAL  BALANCE  BY  DIFFERENCES 


Martin  Simon  &  Sons,  Inc.,  Invest. 

3000. 

Cash 

2734.80 

Merchandise 

417.80 

Expense 

186.65 

Edw.  C.  Falk 

976.65 

C.  W.  Morse   Sons 

1473. 

Notes  Receivable 

500. 

Notes  Payable 

503. 

4894.45 

4894.45 

See  Trial  Balance  by  Totals 


Answers  in  Advanced  Bookkeeping  129 

89.  A  balance  sheet  is  a  statement  of  the  assets,  liabilities  and 
net  worth  of  the  business  at  a  given  stated  or  definite  time.  See 
Answer  96. 

90.  (a)  An  asset  or  resource  shows  the  property  of  the  busi- 
ness or  an  amount  due  to  the  business,  (b)  A  liability  is  a  debt 
of  the  business,  an  amount  owed  to  another  by  the  business. 

91.  (a)  Liquid,  floating,  or  current  assets  are  those  which  the 
business  intends  to  convert  into  cash  at  the  earliest  practical 
moment,  (b)  Deferred  assets  are  assets  not  yet  consumed  or 
used  up;  expense  inventories,  (c)  Trade  assets  include  items 
such  as  merchandise  in  raw  or  manufactured  condition,  ready 
or  about  ready  for  sale,  (d)  Fixed  assets  are  the  permanent 
stable  assets  necessary  for  the  conducting  of  the  business  which 
are  not  converted  directly  into  any  other  form  or  kind  of  asset; 
the  plant,  including  the  machinery,  furnishings,  fixtures,  etc. 

92.  (a)  A  liquid  liability  is  a  debt  owed  by  the  firm  that  will 
have  to  be  paid  within  a  short  time,  (b)  A  deferred  liability 
is  a  liability  incurred,  an  expense  liability,  not  yet  paid  because 
not  due  at  the  time;  liability  inventory,  (c)  A  fixed  liability  is 
not  due  for  a  long  time,  (d)  A  contingent  liability  is  a  liabil- 
ity that  may  arise  in  the  event  of  another  event;  the  happening 
of  another  of  a  certain  thing;  one  that  arises  in  a  certain  con- 
tingency. 

93.  The  Trading  or  Business  Statement  is  derived  from  the 
principal  and  subsidiary  trading  accounts  shown  in  the  final  Trial 
Balance  taken  before  the  Ledger  is  closed,  which  contains  all 
the  items  and  facts  that  indicate  a  profit  or  a  loss  to  the  busi- 
ness. These  facts  are  arranged  in  systematic  order  in  the  state- 
ment with  full  explanations.  Its  purpose  or  object  is  to  show 
the  gross  trading  profit  (or  loss)  from  sales  during  the  period 
represented.  The  accounts  included  are  Merchandise.  Expense, 
Interest,  Discount,  Real  Estate,  Furniture,  Equipment.  Fixtures 
and  all  other  accounts  which  affect  the  gross  trading  profit  (or 
loss)  resulting  from  the  sale  of  merchandise.  The  statement 
shows  the  total  cost  of  purchases  and  of  sales  merchandise,  the 
cost  of  merchandise  sold,  the  total  sales  and  the  net  returns 
from  sales. 


130  Answers  in  Advanced  Bookkeeping 

94.  TRADING  OR  BUSINESS  STATEMENT 

STATEMENT   OF  INCOME,   PROFIT   AND   LOSS   FOR 
THE  YEAR  ENDING  DECEMBER  1917 


Sales                         t 

XXX 

Less  Return  Sales 

XX 

Freight  Outward 

XX 

Allowances  on   Sales 

XX 

Total  Deductions   from 

Sales 

XXX 

Net  Sales   

XXX 

Cost  of  Goods  Sold : 

Inventory,  Jan.  1,  1917.... 

XXX 

Purchases 

XXX 

Less  Return  Purchases 

XX 

Net  purchases 

XXX 

Add  Freight  Inward 

XX 

Total  Cost  of  Pur- 

chases 

XXX 

Deduct:     Allowances  on  Purchases 

XX 

Net  Cost  of  Purchases 

XXX 

Total  Cost  of  Goods 

XXX 

Less  Inventory,  Dec.  31,  1917     XXX 

Cost  of  Goods  Actually  Sold  XXX 


GROSS   PROFIT  ON  TRADING  I 

XXX 

Selling  Expenses : 

Traveling   Expense 

XX 

Shipping  Dep't   Salaries 

XX 

Delivery  Expense 

XX 

Shipping  Supplies 

XX 

Advertising 

XX 

Depreciation  on  Horses  &  Wagons 

XX 

Total  Selling  Expense 

XXX 

Selling  Profit 

XXX 

General  &  Administrative  Expenses: 

Office  Salaries 

XX 

Office  Supplies 

XX 

Rent 

XX 

Insurance 

XX 

Answers  in  Advanced  Bookkeeping  131 

Depreciation   on   Furniture  &   Fixtures       XX 

Total  General  &  Administrative  Exp.  XXX 

Income  from  Operations  TXa 

Additions  to  Income  :  XX 

Interest  XX 

Discount  on  Purchases  XX 

Real  Estate  Appreciation  XX 

Total  Additions  to  Income  XXX 


Total  Income  for  Period  XXX 

Deductions  from  Income  :  XX 

Discount  XX 

Discount  on  Sales  XX 

Reserve  for  Bad  Debts  XX 


Total  Deduction   from  Income  XXXX 


net  profit  XXXX 

Net  Profit  to  be  Disposed  : 

J.  Brown's  Share  XXX 

H.  Smith's  Share  XXX 

XXX        XXXX 


PROFIT  AND  LOSS  STATEMENT,  JAN.  31,  1916 

Sales    $4659.96 

Less  Sales  Allowances 2.00 

Net  sales   4657.96 

Inventory  of  merchandise  at  beginning $3451.09 

Merchandise  Purchases   (cost  delivered 

at   store)    2759.67 

OZ10.76 
Deduct    inventory    of    merchandise    at 

closing    $3062.17    

Less    Stock   Depreciation 153.11     2909.06 


Net  cost  of  goods  sold 3301.70 

Gross  profit  from  trading 1356.26 


132  Answers  in  Advanced  Bookkeeping 

buying  expense 
Salaries  and  Wages  of  Buying  Force.  .       25.00 
Miscellaneous    Buying    Expense 14.00 


Total  buying  expense 39.00    

SELLING   EXPENSE 

Salaries  and  Wages  of  Sales  Force....     177. 33 

Advertising    30.00 

Miscellaneous   Selling  Expense 3.75 

Total   selling   expense 211.08    

DELIVERY    EXPENSE 

Salaries  and  Wages  of  Delivery  Force.     102.67 
Miscellaneous    Delivery    Expense 8.08 

Total  delivery  expense .       110.75    

GENERAL   EXPENSE 

Management   and   Office   Salaries 269.00 

Office  Supplies  and   Expense 22.03 

Insurance   on    Stock   and    Store   Equip- 
ment       1.61 

Taxes  on  Stock  and  Store  Equipment.  2.50 

Losses    from    Bad    Debts 33.56 

Miscellaneous    General    Expense 26.79 

Rent 71.25 

Total  general  expense 426.74      787.57 

Net  profit  from  trading 568.69 

INCOME    FROM     OTHER    SOURCES 

Interest  i7-<>9 

Cash    Discounts    on    Merchandise    Pur- 
chases            6.55 

Rent  income  (net)    16.52 

Miscellaneous    Outside    Income 2.00    7.98 


Total    net    profit 576.67 


95.  The  Financial  Statement,  or  Statement  of  Resources  and 
Liabilities,  is  derived  from  the  resources  and  liabilities  shown  on 
the  Trial  Balance  and  the  inventories  of  resources  and  liabili- 
ties, because  they  represent  the  money  value  or  money  indebted- 
ness. It  includes  the  Cash  Accounts,  Accounts  Receivable,  Ac- 
counts   Payable,    Notes    Receivable    and    Notes    Payable.     The 


Answers  in  Advanced  Bookkeeping  133 

difference  between   the   Resources   or   Assets  and   the  Liabilities 
will  show  the  Present  Worth  or  Net  Insolvency  of  the  business. 

96.  BALANCE  SHEET,  JAN.  31,  1918 

ASSETS 

CURRENT   ASSETS 

Cash  on  hand  and  in  bank $1611.67 

Notes  Receivable  —  Trade  Customers 191.84 

Accounts    Receivable  —  Trade    Custom- 
ers     $3518.81 

Less  Reserve  for  Bad  Debts 33.56 

3485.25 

Inventory  of  merchandise  (at  cost) 2909.06 

Prepaid    Insurance    100.14 

Accrued  Interest  Receivable .71 

Total  current  assets $8298.67 

FIXED    ASSETS 

Store   Property    4500.00 

Warehouse   Property   1975.00 

6475.00 
Less   Reserve    for   Depreciation   on 

Store  and  Warehouse 26.98 

6448.02 

Store  Equipment  272.71 

Office  Equipment  74.37 

Delivery  Equipment   396.67 

Total  fixed  assets 7191.77 


Total   assets    15490.44 

LIABILITIES  AND  CAPITAL 

CURRENT    LIABILITIES 

Notes  Payable  —  Trade  Creditors 1210.50 

Notes    Payable  —  Banks    900.00 

Accounts    Payable  —  Trade    Creditors..  3685.72 

Accounts   Payable  —  Others    485.00 

Accrued    Interest    Payable 19.23 

Accrued   Salaries  and   Wages 82.00 

Accrued  Taxes   7.7? 

Total    current    liabilities 6390.20 


134  Answers  in  Advanced  Bookkeeping 

Mortgages   Payable   (warehouse) 1250.00 

Total   liabilities 7640.20 

Proprietor's  Capital  Account 7850.24 


Total  liabilities  and  capital 15490.44 


97.  (a)  Profit,  or  Gain,  is  an  increase  in  the  capital  or  invest- 
ment of  the  business  due  to  the  operations  of  the  business,  while 
(b)  the  Loss  is  a  decrease  in  the  capital,  (c)  The  gross  profits 
are  the  total  profits,  and  (d)  the  net  profits  are  the  gross  profits 
less  the  losses,  (e)  The  gross  loss  is  the  total  amount  of  the 
losses,  and  the  (f)  net  loss  is  the  gross  loss  less  the  profits,  or 
any  offsetting  amount. 

98.  (a)  The  Present  Worth  is  the  difference  between  the  As- 
sets or  Resources  and  the  Liabilities,  (b)  The  Capital  is  the 
amount  of  money  or  value  invested  in  the  business,  (c)  Sol- 
vency is  the  excess  amount  of  assets  over  liabilities,  while  (d) 
Insolvency  is  the  excess  of  liabilities  over  assets.  Solvency  is 
equal  to  the  Net  Capital,  the  Present  Worth.  Insolvency  is  equal 
to  the  Net  Liabilities  after  the  Resources  have  been  deducted. 

99.  The  Financial  Statement  is  proved  by  subtracting  the  Pro- 
prietor's withdrawals  from  the  Investment,  giving  him  the  Net 
Investment.  To  this  add  the  Net  Gain  (Trading  Statement). 
The  sum  should  equal  the  Present  Worth  found  from  the  Finan- 
cial  Statement. 


Martin  Vogel's  Investment 
Martin  Vogel's  Withdrawals 
Net  Gain  per  Statement 
Present  Worth,  per  Statement 


14500. 
6500. 

3600. 
11600. 

l8loa        18100. 


100.  The  business  or  trading  accounts  should  be  closed  first. 

101.  Loss  and  Gain  accounts  are  those  accounts  that  show  a 
loss  or  a  gain  of  the  business.  Resource  and  Liability  accounts 
show  the  resources  or  the  liabilities  of  the  business.  The  test 
between  a  Loss  and  Gain  Account  and  a  Resource  and  Liability 


Answers  in  Advanced  Bookkeeping  135 

Account  is  the  answer  to  the  question,  "  Does  the  difference  be- 
tween the  debit  and  the  credit  side  of  this  account  show  the  value 
of  something  on  hand,  or  what  I  owe  others,  or  what  others 
owe  you?  me?'  If  the  answer  is  "yes,"  then  it  is  an  R  &  L 
account.  If  the  answer  is  "no,"  then  it  is  an  L  &  G  account. 
The  closing  of  an  L  &  G  account  will  show  the  amount  of  gain 
or  of  loss  sustained  by  that  account  in  its  relation  to  the  entire 
business.  The  closing  of  an  R  &  L  account  will  show  the  re- 
source or  the  liability  of  that  particular  account  in  its  relation 
to  the  business. 

102.  See  Model  Trading  and  Financial  Statements,  Answers 
94  and  96. 

103.  See  Answer  94. 

104.  See  Answer  94. 

105.  From  the  balance  of  the  account.  If  the  debit  side  of  the 
account  is  larger  than  the  credit  side,  then  the  excess  is  a  loss ; 
if  the  credit  side  is  larger  than  the  debit  side,  then  the  excess 
is  a  gain  or  profit. 

106.  See  Answers  89,  90,  95  and  96. 

107.  (a)  To  the  Credit  side  of  the  Proprietor's  Capital  Ac- 
count if  the  balance  is  a  profit;  to  the  debit  side,  if  a  loss,  (b) 
To  equalize  the  entries  made  in  balancing  the  various  Loss  and 
Gain  accounts  ;  that  is,  to  restore  the  equilibrium  of  the  balance 
of  the  ledger  accounts,  the  disturbance  being  caused  by  the  en- 
tering of  the  Loss  and  Gain  balances  in  the  various  accounts. 
Also,  to  determine  at  a  glance  the  amount  of  the  gain  or  loss 
from  all  the  transactions  in  the  various  trading  accounts. 

108.  They  are  the  first  accounts  to  be  closed  when  the  ledger 
is  closed  for  the  purpose  of  making  the  various  statements  in 
order  to  find  out  the  profits  or  losses  and  the  financial  condition 
at  the  end  of  the  period. 

109.  After  the  Loss  and  Gain  accounts  have  been  closed,  and 
for  the  purpose  of  determining  the  Present  Worth. 

110.  An  Account  Receivable  shows  a  resource  when  the  debit 
side  is  the  larger;  an  Account  Payable  shows  a  liability  when 
the  credit  side  is  the  larger.  Cf.  Notes  Receivable  and  Notes 
Payable  Accounts. 

111.  (a)  No.  (b)  Yes,  by  the  amount  of  the  interest.  Be- 
cause the  principal  or  face  of  the  note  is  a  liability,  and  the  net 
resources  result  from  the  subtraction  of  the  liabilities  from  the 


136  Answers  in  Advanced  Bookkeeping 

gross  resources.     In  the  case  of   (b),  however,  the  interest  has 
not  been  considered  in  the  finding  of  the  gross  liabilities. 

112.  On  the  debit  side. 

113.  In  the  Real  Estate  Investment  Account  in  which  are  en- 
tered a\\  items  relating  to  the  purchase  and  sale  and  the  per- 
manent improvement  of  the  property,  the  difference  is  a  re- 
source or  a  liability  according  as  the  debit  or  the  credit  side  is 
larger.  The  rule  is  to  debit  for  the  cost  of  property,  and  to 
credit  for  the  returns  from  the  property.  In  the  R.  E.  Income 
and  Expense  Account,  the  difference  is  a  loss  when  the  debit 
side  —  containing  all  the  items  involving  an  expense  to  the  prop- 
erty—  is  larger  than  the  credit  side  —  containing  all  items  which 
bring  income  to  the  property;  if  the  credit  side  is  larger,  there 
is  a  gain. 

114.  (a)  The  net  profit  is  entered  on  the  credit  side  of  the 
Proprietor's  Capital  Account,  making  the  Present  Worth  larger 
than  the  amount  of  the  Net  Investment,  (b)  The  net  loss  is 
entered  on  the  debit  side,  making  the  Present  Worth  less  than 
the  Net  Investment. 

115.  See  Answers  58  and  114,  and  Answers  to  Regents  Ques- 
tions. 

116.  See  Answer  58  and  Answers  to  Regents  Questions. 

117. 


DEBIT 

CREDIT 

Loss 

and 

Gain 

Resource 

and 

Liability 

118.  Debit:  All  Asset  or  Loss  Accounts.  Credit:  All  Lia- 
bility or  Gain  Accounts. 

119.  Total  amount  of  Resources. 

120.  A  promissory  note  is  an  unconditional  written  promise 
to  pay  a  specified  sum  of  money  to  a  particular  person  or  persons 
at  a  certain  place  on  a  certain  date,  or  on  demand.  See  An- 
swers following. 

121.  The  two  principal  parties  to  a  note  are  (a)  the  maker, 
or  person  signing  the  note,  and  (b)  the  payee,  in  whose  favor 
the  note  is  made  out,  the  person  or  persons  to  whom  the  money 
is  to  be  paid. 


Answers  in  Advanced  Bookkeeping  137 

$500— 00/100  New  York,  October  4,  1917. 

On  demand  Thirty  (30)  Days  after  date  we  promise  to  pay  to 

the  order  of   Morgan   &  Wright    ( Payees ) 

Five   Hundred   (500) Dollars 

at  Garfield  National  Bank. 
Value  received   (with  interest). 
No.  876.     Due  (Nov.  3,  1917). 
(Maturity) 

Sherman  &  Maxwell  (Makers). 

122.  (a)  A  negotiable  note  is  one  the  title  of  which  can  be 
transferred  by  indorsement,  thereby  making  the  specified  sum 
payable  to  the  transferee  of  the  note. 

$500— oo/ioo  Chicago,  111.,  September  8,  1917. 

Ten    (10)    days  after  date   I   promise  to  pay  to  the  order  of 

James   Lansing    

Five  Hundred   (500) Dollars 

at  234  State  Street  (The  Corn  National  Bank),  Chicago,  111. 
Value  received  (with  interest). 

Due 

Lawrence  Roberts. 

(b)  A  non-negotiable  note  cannot  be  transferred  for  payment  to 
another  party. 

$235— 45/100  New  York,  N.  Y.,  Oct.  1,  1918. 

Three  months  after  date  we  promise  to  pay 

to  Sam uel  Roebuck  &  Company 

Two  Hundred  Thirty-five   (235) 45/ioo  Dollars 

at  The  Park  National  Bank  of  New  York 

Value  received,  with  interest   (at  49c). 

Due 

Manhattan  Transit  Company, 
James  L.  Manning,  Treasurer. 

(c)  An  accommodation  note  is  one  given  without  consideration, 
for  the  purpose  of  lending  the  credit  of  the  maker  or  indorser. 

(d)  A  collateral  note  is  a  note  secured  by  collateral,  a  description 
of  which  is  tilled  in  spaces  for  that  specific  purpose,     (e)   A  note 


138  Answers  in  Advanced  Bookkeeping 

"with  interest  at  maturity"  is  a  form  that  merchants  sometimes 
use  to  secure  payment  of  an  invoice  of  goods  or  an  account. 

$4500  San  Francisco,  Cal.,  April  4,  1919. 

On  demand  (Sixty  days)  after  date,  we  promise  to  pay 

to  the  order  of  The  Hamilton  Grange  Company 

Four  Thousand  Five  Hundred Dollars, 

Value  received,  with  interest  at  the  rate  of  8%  per  annum  from 
maturity until  paid.  Negotiable  and  payable  at  Fed- 
eral National  Bank  without  offset. 

Due 

Broadway  Trading  Corporation, 
Henry  Blank,  President. 

123.  A  draft  is  a  written  order  made  by  one  person,  firm,  or 
corporation  (the  drawer)  on  a  second  person,  firm,  or  corpora- 
tion (the  drawee)  to  pay  unconditionally  to  a  third  person,  firm 
Or  corporation  (the  payee)  a  specified  sum  of  money  at  a  certain 
place,  on  a  certain  date,  or  on  demand.  This  written  order  must 
be  accepted  by  the  drawee  in  order  to  constitute  it  a  draft  or  ac- 
ceptance.    If  it  is  not  accepted,  then  it  is  valueless  and  void. 

$    Amount  City,  State,  Date. 

Time   Pay  to  the 

order  of   Payee 

Amount   Dollars 

Value  received  and  charge  the  same  to  account  of 

To  Drawee. 

No.    No.  City,  State. 

Drawer. 

$250.00  ■  Sandusky,  O.,  May  12,  1917. 

At  sight  (on  demand) Pay  to 

the  order  of  James  Browne  &  Co.,  

Two  Hundred  Fifty Dollars 

Value  received  and  charge  to  the  account  of 
To  Grant  &  Green,  Buffalo,  N.  Y. 

Everett    B.    Macy    Company, 
James    Longworth,    President. 


Answers  in  Advanced  Bookkeeping  139 

No.  567  Detroit,  Mich.,  June  25,  1918. 

Sixty  days  after  sight Pay  to  the  order  of 

The  Mercantile  Corporation  of   New   York $15,000.00. 

Fifteen  Thousand  Dollars 

Value  received  and  charge  to  the  account  of 
To  R.  G.  Bayer,  New  York,  N.  Y. 

Taylor,  Browne  &  Murray, 
James    Maxwell,    Cashier. 

Sixty  days  after  sight 

Thirty  days  after  date     Pay  to  the  order  of 

124.  See  Answer  123. 

125.  (a)  A  sight  draft  is  one  that  is  payable  at  sight,  that  is, 
on  presentation  and  acceptance,  while  (b)  a  time  draft  is  payable 
a  certain  time  after  acceptance.  A  time  draft  begins  only  from 
the  date  of  acceptance,  and  its  maturity  (and  the  date  of  ma- 
turity of  any  business  document)  is  the  date  when  it  becomes 
due  and  payable.  If  the  draft  is  an  after  date  draft  it  begins 
to  mature  after  the  date  on  the  draft,  regardless  of  the  date  of 
acceptance.     A  note  is  an  after  date  promise. 

126.  For  the  three-party  draft  see  Answers  123  and  125.  A 
two-party  draft  makes  the  drawer,  or  "  ourselves,"  or  a  bank 
(for  collection  purposes)  the  payee. 

127.  A  bill  of  exchange  is  an  unconditional  order,  in  writing, 
addressed  by  one  person  to  another,  signed  by  the  person  giving 
it,  requiring  the  person  to  whom  it  is  addressed  to  pay  on  de- 
mand, or  at  a  fixed  future  time,  to  order  or  to  bearer,  a  sum 
certain  in  money. 

128.  A  bill  of  exchange  becomes  an  acceptance  when  the 
drawee  writes  across  the  face  of  it,  for  example :  "  Accepted, 
February  15,  1915,  payable  May  15,  1915,  John  Doe."  There  are 
two  kinds  of  acceptances:  (a)  Those  made  by  private  parties, 
such  as  individuals,  firms  or  corporations,  and  known  as  trade 
acceptances,  drawn  by  the  seller  on  the  purchaser  of  goods  sold, 
and  accepted  by  such  purchaser,  (b)  Those  made  by  banks  for 
their  customers  by  means  of  which  the  credit  of  the  bank  is  ex- 
tended to  the  customer  and  known  as  a  bank  acceptance,  consist- 
ing of  the  extension  of  the  bank's  credit  to  a  customer  by  which 
the  bank  permits  the  use  of  its  own  credit  by  its  client  for  a 
consideration,    such    credit    being    either    secured    or    unsecured. 


140  Answers  in  Advanced  Bookkeeping 

depending  entirely  upon  the  business  character  and  financial  re- 
sponsibility of  the  applicant. 

129.  (a)  An  indorsement  (endorsement)  is  the  writing  on  the 
back  of  negotiable  papers,  such  as  checks,  notes,  drafts,  etc.,  for 
the  purpose  of  transferring  the  title  in  the  document  or  to  as- 
sume legal  responsibility  in  the  paper  or  to  guarantee  payment  or 
assume  legal  responsibility,  (b)  A  blank  indorsement  names  no 
indorsee.  It  bears  merely  the  name  of  the  person  in  whom  the 
title  to  the  money  is  vested,  (c)  A  full  or  special  indorsement 
names  the  indorsee,  or  person  or  firm  to  whom  the  title  is  trans- 
ferred, and  the  name  of  the  indorser.  The  paper  cannot  be 
transferred  to  any  other  party  without  the  indorsement  of  the 
special  indorsee,  and  thereby  renders  it  the  safest  kind  of  in- 
dorsement, (d)  A  qualified  indorsement  and  a  restrictive  in- 
dorsement, as  well  as  an  indorsement  without  recourse  all  limit 
the  responsibility  of  the  indorser,  the  last  form  having  the  eft'ect 
of  relieving  the  indorser  of  all  legal  responsibility.  Many  com- 
mercial houses  use  the  For  collection  or  deposit  indorsement. 

130.  Blank  James  C.   Briggs 
Full                    Pay  to  the  order  of 

Harold  A.  Content 
James  C.  Briggs 
Qualified  Without  recourse 

James  C.  Briggs 
Restrictive 

Pay  to  Harold  A.  Content  only 
James  C.  Briggs 
For  Deposit 

Pay  to  the  National  City  Bank  for  deposit 
James  C.  Briggs 

131.  (a)  Interest  is  the  name  given  to  money  paid  for  the  use 
of  money,  and  is  paid  at  the  time  of  maturity  of  the  loan  or  at 
the  time  of  payment  of  the  loan.  Discount  is  the  interest  de- 
ducted in  advance  at  the  time  the  loan  is  made.  Thus,  the  mer- 
chant borrowing  money,  $500,  from  a  bank  for  six  months  will 
receive  only  $485,  the  $15  difference  between  the  principal  loan 
and  the  proceeds  being  the  discount  taken  by  the  bank  in  ad- 
vance. If  a  merchant  borrows  $500  at  6%  from  a  friend  for 
a  period  of  six  months  he  will  pay  the  lender  $515  at  the  date 
of  maturity,  the  $15  being  the  interest. 


Answers  in  Advanced  Bookkeeping  141 

132.  (a)  A  check  is  a  written  order,  similar  to  a  draft,  on  a 
bank  (which  is  really  the  drawee)  to  pay  a  specified  sum 
of  money  to  the  order  of  the  person  named  therein,  (b)  A 
certified  check  is  a  check  which  is  certified  to  by  the  bank  that  the 
person  drawing  the  check  has  funds  sufficient  to  meet  the  pay- 
ment of  the  check.  The  bank  becomes  responsible  for  its  pay- 
ment, and  immediately  charges  it  to  the  account  of  the  drawer, 
(c)  A  cashier's  check  is  a  check,  usually  signed  by  the  cashier 
of  a  bank,  and  made  payable  to  one  who  is  not  a  depositor,  (d) 
A  certificate  of  deposit  is  a  written  statement  issued  by  a  bank 
certifying  to  the  fact  that  the  sum  specified  has  been  deposited 
in  the  bank.  It  is  payable  on  demand,  and  if  allowed  to  remain 
a  certain  time  in  the  bank,  it  may  draw  interest,  (e)  A 
bank  draft  is  a  sight  draft  drawn  by  one  bank  on  another  bank 
and  made  payable  to  a  third  party,  thereby  providing  a  safe  and 
convenient  mode  of  remitting  money  between  distant  cities. 

No.  7629  New  York,  March  24,  1918. 

NATIONAL  COMMERCIAL  BANK 

Pay  to  the  order  of  James  Manning  &  Company 
Seventy-nine   ST/100 Dollars. 

$79_87/ 
^  100 

Franklin   Pierce. 

133.  A  voucher  is  a  statement  applied  to  a  document  that 
vouches  for  the  account  or  some  business  transaction. 

134.  A  bill  is  a  statement  detailed  of  the  amount  of  a  debt, 
for  goods  or  for  services  rendered,  giving  the  date,  the  names 
of  the  parties,  items,  prices,  terms,  and  total,  (b)  When  re- 
ceived from  others  it  is  usually  called  an  invoice,  though  the 
terms  are  now  frequently  used  interchangeaby.  (c)  An  order  is 
a  written  request  on  a  person  or  firm  to  deliver  goods  or  pay 
money  to  a  person  or  firm,  usually  named,  or  to  bearer. 

135.  (a)  Terms  on  account,  abbreviated  ale,  usually  means 
that  the  invoice  is  due  between  the  1st  and  10th  of  the  following 
month,  (b)  Terms  net,  no  discount  is  to  be  allowed  for  payment 
on  payment,  (c)  Terms  30  days,  or  Net  30  days,  that  the  bill, 
due  at  the  end  of  30  days  from  the  date  of  the  invoice,  is  not  sub- 
ject to  a  discount,  (d)  Cash  3%,  that  the  invoice  is  subject  to 
a  discount  of   3%   if  paid  on  date  of  maturity,     (e)   Terms  60 


142  Answers  in  Advanced  Bookkeeping 

days,  3/10  days,  means  that  the  invoice  is  due  at  the  end  of  60 
days  and  is  then  subject  to  no  discount;  if  the  bill  is  paid  at  the 
end  of  10  days,  a  discount  of  3%  may  be  deducted,  (f)  Terms 
3/10,  2/30,  net  70,  that  3%  may  be  deducted  if  the  bill  is  paid 
within  10  days,  2%,  if  paid  within  30  days,  and  that  the  bill 
is  net  at  70  days  payment,  (g)  Terms  3/10  days.  60  x,  that  3% 
may  be  deducted  if  the  bill  is  paid  within  70  days,  the  60  days 
extra  being  the  "  dating." 

136.  A  monthly  statement,  or  statement  of  account  is  a  writ- 
ten copy  of  the  account  showing  its  condition ;  it  generally  has 
a  detailed  statement  of  the  debits  with  offsetting  credits. 

137.  (a)  An  account  sales  is  a  detailed  itemized  statement  of 
sales  and  charges  rendered  by  a  commission  merchant  or  con- 
signee to  the  consignor,  (b)  The  goods  or  merchandise  re- 
ceived to  be  sold  is  called  the  consignment,  (c)  the  person  or 
firm  sending  the  goods  is  the  consignor,  and  (d)  the  person  or 
firms  receiving  goods  is  called  the  consignee.  The  consignee  is 
also  called  the  commission  merchant.  He  is  the  agent  of  the 
consignor,  (e)  The  commission  is  the  fixed  per  cent  of  the 
gross  sales  deducted  by  the  commission  merchant. 

138.  A  bill  of  lading  is  a  receipt  for  merchandise  delivered  to 
a  transportation  company  or  common  carrier,  for  shipment,  con- 
taining a  statement  of  the  conditions  under  which  the  goods  are 
received  by  the  common  carrier  and  the  rules  affecting  the  care 
and  delivery  of  the  goods.  The  Interstate  Commerce  Commis- 
sion, by  order  of  June  27,  1908,  approved  a  uniform  bill  of  lad- 
ing for  general  use,  and  now  current  throughout  the  United 
States,  (b)  The  straight  bill  of  lading  is  non-negotiable  and  is 
drawn  up  in  a  set  of  three  papers,  the  straight  bill  of  lading, 
original;  the  carbon  copy  memorandum,  an  acknowledgment  that 
the  original  has  been  issued;  and  the  second  carbon  copy,  the 
shipping  order.  The  first  two  are  signed  by  both  the  shipper  and 
the  common  carriers  agent,  while  the  shipping  order  is  signed 
by  the  shipper  only.  The  three  papers  are  printed  on  white 
paper.  The  transportation  company  retains  the  shipping  order, 
the  shipper,  the  memorandum,  and  the  original  bill  of  lading  is 
sent  to  the  consignee  or  buyer  of  the  goods,  (c)  The  order  bill 
of  lading  is  negotiable  by  endorsement.  The  original  is  printed 
on  yellow  paper,  the  duplicate  and  the  memorandum  and  the 
shipping   order   on   blue   paper,     (d)     A   shipper's   order   is   the 


Answers  in  Advanced  Bookkeeping  143 

name  given  to  the  shipment  or  consignment  when  the  order  bill 
of  lading  is  used.  It  is  also  customary  to  draw  a  sight  draft, 
attach  it  to  the  B/L,  and  have  payment  or  collection  made 
through  a  bank.  The  consignee  cannot  get  the  goods  until  after 
he  has  paid  the  draft,  because  the  carrier  will  not  deliver  the 
goods  until  the  bill  of  lading  is  surrendered.  For  this  reason, 
this  is  frequently  called  a  C.  O.  D.  transaction. 

139.  (a)  (a,  at,  (b)  pd.,  paid,  (c)  reed.,  received,  (d)  ult, 
last  month,  (e)  E.  O.  E.,  errors  and  omissions  excepted,  (f) 
do.,  ditto,  the  same,  (g)  shpt,  shipment,  (h)  B/L,  bill  of  lad- 
ing, (i)  f.  o.  b.,  (j)  on  memo.,  on  memorandum. 

140.  (a)  Check,  (b)  Day  Book,  (c)  Inventory,  (d)  Freight, 
(e)  Steamer,  (f)  Payment,  (g)  Number,  (h)  Check  mark,  (i) 
One  and  three-fourths,  (j )  Account. 

141.  All  negotiable  documents,  orders  or  promises  to  pay  a 
certain  amount  of  money,     (b)   Notes,  drafts,  B/L. 

142.  (a)  Inc. —  The  firm  is  a  corporation. 

(b)  Assignment  —  They  have  transferred  their  rights  in  their 
property  or  assets  to  a  certain  person  (or  persons)  who  will 
distribute  the  assets  for  the  benefit  of  the  creditors,  subject  to 
review  by  the  courts. 

(c)  Insolvency  —  Inability  to  pay  their  debts. 

(d)  Defalcation  —  Embezzlement  or  theft  of  money  or  prop- 
erty by  an  agent  who  holds  it  in  trust. 

(e)  Consignee  —  The  person  or  firm  to  whom  the  goods  are 
consigned  or  sent. 

(f)  To  realize  in  full  —  To  get  the  full  value  or  KXK/c  of  the 
debt  or  amount  due. 

(g)  Promissory  Note  —  See  Answer  120. 

(h)  Indorsed  —  See  Answer  130. 

(i)  Secured  by  collateral — Sufficient  property  has  been  de- 
posited as  security  to  guarantee  the  payment  of  the  full  amount 
due  on  the  note. 

143.  (a)  Draii'n  on  us  —  A.  &  H.  have  drawn  a  draft  to  be 
presented  to  us  for  acceptance. 

(b)  At  10  days  sight  —  Payable  by  us  ten  days  after  we  have 
accepted  same  draft. 

(c)  Net  proceeds  —  The  amount  due  them  after  commission 
and  expenses  have  been  deducted. 


144  Answers  in  Advanced  Bookkeeping 

(d)  Consignment  —  The  merchandise  sent  to  us  for  sale. 

(e)  Honor  their  draft  — To  accept  it  for  payment. 

(f)  Collateral — See  (i)  in  the  preceding  Answer. 

(g)  Indorscr—Ste  (h)  in  the  preceding  Answer. 

144.  (a)  Journal.  James  Thornton  has  invested  $4200  in  the 
business.  Cash  Book  and  Ledger,  (b)  Cash  Book.  Edwin 
Brooks  paid  $300  on  account,  and  the  business  paid  $50  for  rent 
and  $250  to  Lawton  &  Co.  Ledger,  (c)  Journal.  Milwaukee 
Stores  bought  a  bill  of  goods  amounting  to  $1500,  terms,  Cash, 
$500;  Note  (30-days),  $700,  the  balance  on  time.  Cash  Book, 
Ledger,  Notes  Book. 

145.  A  resource. 

146.  Assets  or  Resources :  Real  Estate.  Merchandise,  Cash, 
Liabilities :     Notes  Payable,  Accounts  Payable. 

147.  (a)  C.  B.  (b)  Dr.  (c)  Amt.  ford,  (d)  Pes.  (e)  C. 
O.  D. 

148.  (a)  Collect  on  delivery,  (b)  Subject  to  a  discount  of 
40%  from  the  list  price,  (c)  By  or  each,  (d)  Free  on  board 
(the  cars  or  steamer)  at  the  shipping  (or  mentioned  place)  ;  i.e., 

without  charges  for  packing,  drayage,  etc. 

149.  $500.  Buffalo,  N.  Y.,  Nov.   19,  1917. 
Three  months  after  date,  we  jointly  and  severally  promise  to 

pay  to  the  Order  of  Herman  C.  Price 

Five    Hundred    #. ..Dollars 

at  the  Exchange  National  Bank  of  Brooklyn, 

Value  received,  with  interest. 

No.  Due  

Frederick  C.  Martin, 
James  L.  Horton. 

150.  (a)  Letter  of  Credit  —  A  letter  of  notification  issued  and 
sent  by  a  bank  to  its  correspondents  to  the  effect  that  the  per- 
son (named)  presenting  the  letter  of  credit  is  entitled  to  draw 
up  to  the  amount  named.  The  amount  or  amounts  drawn  are 
written  on  the  back  of  the  letter. 

(b)   Certificate    of   Deposit  —  A    document    issued   by    a   bank 
that  the  person  named  has  deposited  the  amount  named  therein. 
•   (c)   Voucher  —  An  original   document  to  prove  the  truth   of 
certain  facts. 


Answers  in  Advanced  Bookkeeping  145 

(d)  Protest  —  A  legal  notification  to  the  debtor  to  the  effect 
that  a  certain  amount  of  money  due  has  not  been  paid. 

(e)  Lease — A  legal  document  granting  the  use  of  real  estate 
or  property  for  a  certain  time  on  certain  conditions. 

(f)  Lien  —  A  legal  claim  on  goods  or  real  estate  with  right  to 
control  or  retain  same  until  certain  conditions  have  been  satisfied. 

151.  Merchandise  175. 

Cash  175. 

152.  Cash  244. 

R.  H.  Macy  &  Co.  244. 

153.  Merchandise  126.45 

Corbett  &  Co.  126.45 

154.  Corbett  &  Co.  126.45 

Cash  122.66 

Merchandise  Discount  3.79 

155.  Franklin  Simon  &  Co.  475. 

Merchandise  475. 

156.  Cash  465.50 
Merchandise  Discount  9.50 

Franklin   Simon   &  Co.  475. 

157.  R.  H.  Montgomery  &  Co.  1250. 

Merchandise  1250. 

158.  Cash  625. 

R.  H.  Montgomery  &  Co.  625. 

159.  As  in  Answer  158. 

160.  Merchandise  744. 

Marshall  Field  &  Co.  744. 

161.  Marshall  Field  &  Co.  250. 

Cash  250. 

162.  As  in  Answer  161. 

163.  Expense  76. 

Cash  76. 

164.  Rent  200. 

Cash  200. 

165.  Cash  100. 

Rent  '  100. 

166.  Notes  Receivable  137.25 

Merchandise  137.25 

167.  Cash  137.25 

Notes  Receivable  137.25 


146 

Answers  in  Advanced  Bookkeeping 

168. 

James  A.  Hearn  &  Son 

298. 

Notes  Payable 

298. 

169. 

Notes  Payable 

298. 

Cash 

298. 

170. 

Cash 

5000. 

Samuel  Johnson,  Proprietor 

5000. 

171. 

Samuel  Johnson 

125. 

Cash 

125. 

172. 

Samuel  Johnson 

75. 

Merchandise 

75. 

173. 

Cash 

1750. 

Samuel  Johnson 

1750. 

174. 

Cash 

1500. 

Merchandise 

1500. 

Notes  Receivable 

500. 

Accounts  Payable 

700. 

Notes  Payable 

250. 

Walter  Lippman 

2550, 

175. 

Cash 

985. 

Discount 

15. 

Notes  Payable 

1000. 

176. 

Cash 

1990. 

Discount 

10. 

Notes  Receivable 

2000. 

177. 

Cash 

2955. 

Discount 

45. 

Notes  Payable 

3000. 

178. 

Walter  Emmerich  &  Co.'s  entry 

• 

Thomas  Talcott  &  Co. 

3287. 

Merchandise 

3287. 

Thomas  Talcott  oz:  Co.'s  entry: 

Merchandise 

3287. 

Walter  Emmerich  &  Co. 

3287. 

179. 

Cash 

500. 

Notes  Payable 

500. 

Discount 

4.92 

Cash 

4.92 

Notes  Payable 

500. 

Cash 

500. 

Answers  in  Advanced  Bookkeeping  147 


5. 

500. 
5. 


500. 


5. 
2.53 


100. 


100. 


100. 


100. 


500. 
5. 

500. 
5. 


180.      A's  entry: 

Notes  Receivable  500. 

B 
Cash 

Interest 
B's  entry  : 
A 

Notes  Payable 

Interest 

Cash 
A's  entry:    (B  makes  no  entry) 

181.  Cash 

Notes  Receivable  ^u- 

Cash 

Interest 
Discount 

Cash 

182.  A's  entry: 
4      c  502.50 

Notes  Receivable 
Interest 
B  makes  no  entry. 
C's  entry : 

Notes  Receivable  500. 

Interest  Accrued  2.50 

A 
183.     A's  (Drawer's)  entry: 
C 

B 
B's   (Drawee's)   entry: 
B    (Notes  Payable)  100. 

Cash 
C's  (Payee's)  entry: 
Cash 
A 
184.      A's  entry: 
Cash 
B 
B's  entry: 
A 


5. 
2.53 


500. 
2.50 


502.50 


100. 


100. 


100. 


100. 


148  Answers  in  Advanced  Bookkeeping 

Cash  100. 

185.  A's  entry: 

C  400. 

B  400. 

186.  B's  entry: 

A  400. 

Notes  Payable  400. 

187.  C's  entries: 

Cash     *  400. 

Notes  Receivable  400. 

Discount  3.53 

Cash  3.53 

188.  B's  entry: 

Notes  Payable  400. 

Cash  400. 

If  C  holds  the  acceptance  until  maturity  his  entry  then 
will  be: 
Cash  400. 

Notes  Receivable  400.     » 

If  the  draft  is  payable  "after  sight"  instead  of  "after 
date  "  in  the  preceding,  then  there  will  be  a  difference 
of  two  (2)   days  which  must  be  added  to  the  items  in 
the  answers  preceding. 
A's  entry: 

189.  Shipment  B  200. 

Merchandise   (Sales)  200. 

190.  A's  entry: 

Shipment  B  40. 

Cash  40. 

191.  B's  entry: 

Consignment  A  10. 

Cash  10. 

192.  B's  entry: 

C  125. 

Consignment  A  125. 

193.  B's  entry: 

Cash  150. 

Consignment  A  150. 

194.  (a)   A's  entry: 

Cash  100. 


Answers  in  Advanced  Bookkeeping  U9 

Shipment  B  100. 

B's  entry : 
Consignment  A  100. 

Cash  100. 

(b)   Notes  Receivable  100. 

Shipment  B  100. 

Consignment  A  100. 

Notes  Payable  100. 

195.  B's  entry : 

Consignment   A  7. 

Charges  Con.  7. 

196.  B's  entry  : 

Consignment   A  2.75 

Cash  2./D 

197.  Consignment  A  13.75 

Commissions  13.75 

198.  The  first  entry  is  made  by  A,  and  the  second  by  B. 

(a)  Cash  141.50 
Shipment   B  141.50 

Consignment  A  141.50 

Cash  141.50 

(b)  Ascertain  who  is  to  pay  the  exchange  charges. 
Cash  141.50 

Shipment  B  141.50 

Consignment  A  141.50 

Shipment  B  141.50 

(c)  B  141.50 
Shipment  B  141.50 

Consignment  A  141.50 

Cash  141-50 

(d)  Notes  Receivable  141.50 
Shipment  B  141.50 

Consignment  A  141.50 

Notes   Payable  141.50 

199.  Assume  that  there  is  no  element  of  exchange  involved. 
A's  entry  : 

Shipment  B  11-50 

Loss  &  Gain  11.50 

B  has  no  entry,  since  his  Consignment  A  Account  bal- 
ances. 


150  Answers  in  Advanced  Bookkeeping 

200.  Cash  3000. 
Merchandise                                       2000. 

Martin   Holman  5000. 

201.  Loss  &  Gain  276. 

Expense  276. 

To  transfer  loss  shown  by  Ex- 
pense %  to  Loss  &  Gain  %  to 
close  account. 

202.  Discount  on  Purchases  427. 

Loss  &  Gain  427. 

To  transfer  gain  shown  by  D/P 
Account  to  L/G  Account  to  close 
account. 

203.  Loss  &  Gain  298. 

Discount  on  Sales  298. 

To  transfer  loss  shown  by  D/S 
Account  to  L/G  Account  to  close 
account. 

204.  Loss  &  Gain  18. 

Interest  &  Discount  18. 

To  transfer  loss  shown  by  I/D 
Account  to  L/G  Account  to  close 
account. 

205.  Merchandise  2350. 

Loss  &  Gain  2350. 

To  transfer  the  gain  shown  by 
the   Merchandise   Account  to   the 
L/G  Account  to  close  account. 
Loss  &  Gain  2350. 

Merchandise  2350. 

To  transfer  the  loss  shown  by 
the  Merchandise  Account  to  the 
L/G  Account  to  close  account. 

206.  Loss  &  Gain  750. 

Proprietor  750. 

To  transfer  the  net  gain  shown 
by  the  L/G  Account  to  the  Pro- 
prietor's Account  to  close  the  ac- 
count 
Proprietor  750. 


Answers  in  Advanced  Bookkeeping  151 

Loss  &  Gain  750. 

To  transfer  the  net  loss  shown 
by  the  L/G  Account  to  the  Pro- 
prietor's Account  to  close  the  ac- 
count. 

207.  Expense  Inventory  60. 

Expense  60. 

To    show    and    enter    expense 
inventory  on  books. 
Loss  &  Gain  140. 

Expense  140. 

To  transfer  loss  shown,  etc. 

208.  Purchases  2500. 

Merchandise  Inventory  2500. 

To  transfer  old  Merchandise 
Inventory  to  Purchases  Account 
to  close  the  account. 

209.  Merchandise    Inventory  1800. 

Purchases  1800. 

To  transfer  new  Merchandise 
Inventory  to  Purchases  Account 
to  close  the  account. 

210.  Sales  3500. 

Purchases  3500. 

To  close  Purchases  Account 
into  Sales  Account  for  the  deter- 
mination of  gain  (or  loss)  on 
Merchandise  Account. 

211.  Sales  1350. 

Loss  &  Gain  1350. 

To    transfer    the    profit    of    the 
Merchandise  Accounts  to  the  Loss 
&  Gain  Account. 
Loss  &  Gain  1350. 

Sales  1350. 

To  transfer  the  loss,  etc. 


152  Answers  in  Advanced  Bookkeeping 

212.  The  advantages  are:  They  are  self -indexing,  easily  access- 
ible, reduce  errors  in  posting,  capable  of  expansion  or  reduction 
without  the  need  of  a  new  set  of  cards,  aid  office  efficiency,  and  may 
be  used  by  more  than  one  person  at  a  time.  The  disadvantages 
are:   They  may  be  misplaced  or  lost,  and  they  make  fraud  easy. 

213.  The  advantages  of  columnar  books  are:  They  enable  us  to 
post  items  in  total  and  therefore  save  time  and  labor;  they  enable 
us  to  present  the  facts  in  the  general  ledger  in  su-rmary  form,  and 
thereby  make  monthly  and  yearly  comparisons  easy;  they  enable 
us  to  introduce  controlling  accounts  with  all  their  advantages. 
They  are  time  and  labor  savers. 

214.  In  addition  to  the  advantages  enumerated  in  the  preceding 
we  may  be  able  to  tell  at  a  glance  the  sales  or  the  purchases  by 
department,  commodity  or  group  of  commodities.  Of  course,  the 
advantages  accruing  depend  upon  the  use  and  the  number  of  col- 
umns. 

215.  A  partnership,  or  copartnership,  is  an  association  or  com- 
bination of  two  or  more  persons  or  firms  for  the  purpose  of  conduct- 
ing a  business  and  sharing  in  the  profits  and  dividing  the  losses, 
with  all  the  powers  and  privileges  under  the  laws  that  each  partner 
enjoys  as  an  individual. 

216.  The  articles  of  copartnership  is  the  contract  entered  into 
between  the  individuals  and  firms  forming  the  copartnership, 
stating  the  powers  and  duties,  limitations  and  restrictions  of  the 
copartnership,  and  the  individual  members. 

217.  The  names  and  addresses  of  the  individual  members  or 
firms  comprising  the  partnership,  the  amount  of  each  member's 
investment,  the  powers  and  duties,  the  restrictions  and  limitations 
of  each  member,  the  purpose  of  the  organization,  the  length  and 
duration  of  the  partnership,  the  division  of  the  profits  and  the 
losses,  and  such  other  details  as  are  found  necessary  to  the  nature 
of  the  business  conducted  by  the  partnership. 

218.  By  mutual  consent  and  agreement;  expiration  of  time  limit 
as  noted  in  the  articles  of  copartnership;  withdrawal  of  a  partner; 
bankruptcy  of  a  partner  or  the  firm ;  death  of  a  partner ;  war  between 
nations  represented  by  the  partners;  appointment  of  a  receiver 
by  court  decree  for  misconduct  or  insanity,  or  any  other  cause. 

219.  (a)  A  corporation  is  "an  artificial  person,  separate  from  its 


Answers  in  Advanced  Bookkeeping  153 

members,  authorized  by  law,  created  by  charter  and  having  in 
addition  to  the  powers  expressed  by  its  charter,  the  implied  powers 
of  a  natural  person."  "  An  artificial  being,  invisible,  intangible, 
and  existing  only  in  contemplation  of  law."  (&)  The  charter  is 
the  document  or  license  issued  to  a  corporation  by  the  government 
stating  its  powers  and  privileges,  and  providing  for  compliance 
with  the  general  state  law  on  corporations,  (c)  A  franchise  is  a 
certain  specific  right  or  privilege  granted  by  a  government  to  a 
corporation  or  to  an  individual  and  stated  in  the  charter. 

220.  (a)  Capital  stock  is  the  total  amount  of  capital  authorized 
by  the  charter  or  certificate  of  incorporation.  (6)  The  capital  of  a 
corporation  is  the  net  assets,  or  the  excess  of  assets  over  and  above 
the  liabilities.  It  is  equal  to  the  paid-in  capital  plus  the  surplus, 
plus  the  undivided  profits,  plus  the  general  reserves,  if  any.  (c) 
The  surplus  and  undivided  profits  are  practically  synonymous,  both 
showing  the  undistributed  profits,  accumulated  and  left  in  the 
business  to  strengthen  its  financial  standing.  (d)  The  reserves 
are  part  of  the  net  earnings  of  a  business,  partnership  or  corpora- 
tion, withheld  from  distribution  and  set  aside  to  meet  any  contin- 
gent expense  or  loss  of  the  business,  or  depreciation  of  assets,  (e) 
A  sinking  fund  is  a  sum  of  money  set  aside  at  certain  intervals  and 
consequently  increasing  in  amount,  for  the  purpose  of  (i)  liquidat- 
ing a  known  existing  liability,  (2)  providing  a  quick  asset  to  meet  a 
contingent  liability,  or  (3)  protection  against  a  future  and  unfore- 
seen contingency  or  loss. 

221.  (a)  Issued  stock  is  stock  issued  by  a  corporation  to  raise 
and  provide  for  a  working  capital;    it  provides  the  paid-in  capital. 

(b)  Unissued  stock  is  that  part  of  the  capital  stock  which  has  not 
been  issued  and  therefore  not  subscribed  for.     It  is  held  in  reserve. 

(c)  Treasury  stock  is  the  issued  stock  which  has  been  returned  to  the 
treasury  through  purchase  from  the  funds  of  the  corporation  or 
through  gift  and  donation,  and  does  not  participate  in  the  dividends. 

(d)  Common  stock  is  the  stock  upon  which  the  dividends  are  to  be 
declared  and  paid  after  the  preferred  stock  has  received  its  stated 
dividends,  (e)  Preferred  stock  is  stock  to  which  preference  has 
been  given  in  the  payment  of  dividends  from  the  accrued  profits 
at  a  fixed  and  stated  rate  before  dividends  are  paid  to  the  holders 
of  the  common  stock.     X.B.  Both  common  and  preferred  stocks 


j  54  Answers  in  Advanced  Bookkeeping 

may  be  separately  preferred  as  to  rights  and  privileges  in  the  matter 
of  the  regulation  of  the  corporation  and  its  affairs;  e.g.,  voting 
rights,  rights  of  purchase  of  subsequent  issues  of  stock,  etc.  These 
naturally  depend  upon  the  charter  provisions.  (/)  Watered  stock 
is  stock  issued  by  a  corporation  for  which  no  actual  or  material 
value  has  been  received  by  the  corporation,  (g)  The  stock  certifi- 
cate is  the  document  issued  by  the  corporation  to  the  stockholder, 
certifying  to  the  holder's  ownership  of  the  stated  number  of  shares 
of  stock  in  that  corporation.  N.B.  Shares  of  stock  are  now  issued 
"  without  par  value." 

222.  (a)  The  dividend  is  the  pro  rata  division  of  the  profits  or 
some  stated  portion  thereof  among  the  stockholders  of  the  corpora- 
tion. It  is  generally  a  fixed  and  stated  per  cent  of  the  profits  on  the 
outstanding  preferred  or  common  stock;    it  may  be  a  stock  issue. 

(b)  Cumulative  preferred  stock  is  the  preferred  stock  to  which  the 
fixed  dividend  is  attached  each  year  whether  earned  and  issued  or 
not,  such  accumulated  dividend  to  be  satisfied  and  paid  before  the 
common  or  any  other  preferred  stock  can  receive  any  dividend. 

(c)  Non-cumulative  preferred  stock  is  preferred  stock  which  receives 
a  dividend  only  when  it  is  earned,  and  after  the  cumulative  preferred 
stock  has  received  its  dividends. 

223.  The  advantages  of  incorporation  are:  (a)  Limited  liability 
of  stockholders,  (b)  centralized  control  of  all  the  activities  and  func- 
tions of  the  corporation,  (c)  continuation  and  perpetuity,  (d)  the 
ease  and  facility  of  extension  of  capital,  (e)  greater  ease  of  securing 
of  credit,  (/)  ease  of  transfer  of  ownership,  (g)  extent  of  powers 
and  activities  limited  only  by  law.  The  disadvantages  are:  (a) 
The  limitations  of  the  law;  (b)  the  control  of  the  corporations  and 
its  assets  may  be  in  the  hand  of  one  or  a  group  holding  just  a  bare 
majority  of  the  stock,  or  of  a  particular  class  of  stock,  to  the  detri- 
ment of  the  minority  stockholders. 

224.  Depends  upon  the  laws  of  the  State  in  which  the  corporation 
has  been  chartered.  But  generally  by  (a)  vote  of  the  directors  and 
the  stockholders,  two-thirds  of  the  stock  voting  in  the  affirmative, 
(b)  court  order  after  the  appointment  of  a  receiver,  (c)  lapse  of  char- 
ter, (d)  legislative  enactment.  The  consent  of  the  Secretary  of 
State  (or  other  designated  state  official)  is  necessary  in  order  to 
protect  the  interests  of  the  minority  stockholders. 


Answers  in  Advanced  Bookkeeping  155 

225.  (a)  Raw  materials  are  materials  which  enter  into  the  manu- 
facture of  an  article,  and  forming  an  element  thereof,  (b)  Goods  in 
process  are  goods  having  been  partially  completed  in  their  manu- 
facture, (c)  Finished  goods  are  those  which  have  been  completed 
in  their  manufacture  and  are  ready  for  sale. 

226.  (a)  Prime  (or  first)  cost  is  the  cost  of  the  materials  plus 
the  cost  of  labor,  (b)  Net  cost,  factory  cost,  is  the  prime  cost  plus 
the  burden  or  overhead,  (c)  The  gross  cost  is  the  total  cost,  and  is 
the  sum  of  the  cost  of  all  elements  entering  into  the  cost  of  the 
commodity,  cost  of  materials,  labor,  expenses,  burden,  etc.  The 
profit  is  fixed  on  this  cost,  and  the  sum  of  the  profit  and  the  gross 
cost  equal  the  selling  price.  (:/)  The  burden  or  overhead  is  the 
factory  expenses  and  includes  the  rent  and  taxes  of  factory,  depre- 
ciation of  machinery,  power  and  lighting,  unproductive  labor, 
interest  of  machinery,  etc.,  and  cost  of  superintendence.  Dis- 
tinguish the  factory  expense  from  cost  of  labor  in  the  prime  cost. 

227.  (a)  Selling  expenses  are  those  relating  to  the  sales  depart- 
ment or  selling  force,  and  include  such  items  as  wages  and  commis- 
sion of  the  selling  force,  traveling  expenses,  advertising,  delivery 
equipment  depreciation,  etc.  (b)  The  general  and  administrative 
expenses  are  those  relating  to  the  general  management  of  the  busi- 
ness, and  distinguished  from  the  manufacturing  and  the  selling 
departments,  and  include  such  items  as  rent,  office  expenses,  sala- 
ries and  wages  of  the  office  force,  office  supplies,  general  superin- 
tendence of  the  business,  etc.  See  Answer  94  an  1  the  various 
Statements  of  Income,  Profit  and  Loss  throughout  the  book. 

228.  An  account  sales  is  an  itemized  statement  rendered  by  the 
commission  merchant  to  the  consignor  showing  the  goods  received, 
the  sales,  the  charges,  in  detail,  commission,  and  the  net  proceeds. 
See  Answers  throughout  the  book.  An  account  purchase  is  the 
itemized  statement  sent  by  the  purchasing  agent  to  his  principal, 
giving  in  detail  all  the  items  entering  into  the  gross  cost. 

229.  (a)  Good  will  {goodwill)  is  the  value  attached  to  a  business 
over  and  above  the  value  of  its  property  actually  due  to  its  standing 
and  reputation,  to  its  location,  to  its  established  trade,  kind  of 
trade,  patent  rights,  etc.,  and  is  the  difference  between  the  capital 
and  the  actual  value  of  the  property,  (b)  Depreciation  is  the 
lessening  or  decline  in  value  of  property  due  to  use,   wear  and 


156  Answers  in  Advanced  Bookkeeping 

tear,  or  obsolescence,  (c)  Reserves.  See  220  (d).  (d)  Turnover  is 
the  amount  of  merchandise  sold  during  the  fiscal  or  business  period, 
generally  the  year.     It  may  be  many  times  the  amount  of  its  capital. 

230.  In  single  entry  bookkeeping  each  transaction  has  only  one 
entry  in  the  journal  or  ledger,  either  a  debit  or  a  credit,  while  in 
double  entry  there  are  two  entries,  a  debit  and  a  credit,  for  each 
transaction.  For  greater  detail  as  to  the  differences,  see  the  fol- 
lowing answer. 

231.  See  the  preceding  answer. 

In  single  entry :  Only  personal  accounts  are  kept ;  only  one  entry 
is  possible;  a  cumbersome  proof  of  posting  is  used  to  test  the  accu- 
racy of  the  posting;  the  statement  of  assets  and  liabilities  is  prepared 
from  various  sources,  and  therefore  the  danger  of  omissions;  an 
itemized  statement  of  profits  and  losses  cannot  be  made,  since  loss 
and  gain  accounts  are  not  kept  in  the  ledger;  since  no  profit  and  loss 
statement  is  possible,  no  possible  guide  as  to  the  efficiency  of  the 
business;  its  suitability  and  adaptability  is  limited  to  only  retail 
businesses. 

In  double  entry :  Both  real  and  nominal  accounts  are  kept ;  there 
are  two  entries  for  each  transaction,  therefore  the  books  are  always 
in  balance;  the  trial  balance  is  used  to  test  the  accuracy  of  the  work; 
balance  sheet  is  prepared  from  the  books,  and  therefore  omissions 
are  not  possible;  the  profit  and  loss  statement  is  proved  by  the  bal- 
ance sheet;  from  the  separate  sources  of  profit  and  loss  are  set  forth 
very  clearly  and  therefore  a  test  of  the  efficiency  of  the  business; 
it  is  adaptable  to  all  kinds  and  conditions  of  business. 

232.  Ascertain  whether  the  same  books  are  to  be  used.  If  a  new 
set  of  books  is  to  be  used,  find  out  if  controlling  accounts  are  to  be 
opened.     Then  follow  the  following  well  defined  rules: 

(a)  Take  complete  inventories  of  all  items  of  value  connected  with 
the  business. 

(b)  Classify  the  items  into  appropriate  groups,  such  as  Cash, 
Merchandise,  Furniture  and  Fixtures,  Delivery  Equipment,  Machin- 
ery, Supplies,  Real  Estate,  Accounts  Receivable,  Notes  Receivable, 
and  others.  Classify  items  owing  by  the  business  in  similar  groups; 
such  as  Accounts  Payable,  Notes  Payable,  Mortgages  Payable, 
and  others,  according  to  the  nature  of  the  business. 

(c)  The  net  difference  between  the  total  of  the  above  Asset 
items  and  the  Liability  items- is  the  present  worth  of  the  business. 

(d)  List  the  Assets  and  Liabilities  in  the  Journal,  noting  the 


Answers  in  Advanced  Bookkeeping 


157 


present  worth  of  the  business  as  the  Proprietor's  Account  on  the 
Liability  or  Credit  side. 

(e)  Open  a  separate  sheet  for  each  account  listed,  both  debit  and 
credit,  including  the  personal  accounts. 

(/)  Take  off  complete  trial  balance  to  establish  proof  of  correct 

posting. 

(g)  Open  Trading  Accounts  or  other  appropriate  accounts  that  will 

better  fit  the  needs. 


233.  John  Brooks  and  Henry  Lang  have  formed  a 
under  the  firm  name  of  Brooks  &  Lang  to  conduct  a 
ness  with  the  following  investment: 

Cash  $5000 

John  Brooks 
Henry  Lang 

234.  Explanation: 

Cash,  in  Bank 
Merchandise,  Inventory 
Accounts  Receivable,  Schedule  A 

John  Brooks  (Capital) 
Cash 

Merchandise 
Accounts  Receivable 

Henry  Lang  (Capital) 

235.  Explanation: 

Cash 

Merchandise 
Accounts  Receivable 

Accounts  Payable,  Schedule  B 

John  Brooks 
Cash 

Merchandise 
Accounts  Receivable 

Accounts  Payable 

Henry  Lang 

236.  Explanation: 

Cash  2000 

Merchandise  1000 

Accounts  Receivable  2000 

John  Brooks,  Personal 

John  Brooks,  Capital 


partnership 
busi- 


2000 
1000 
2000 

2000 
2500 
1500 


2000 
1000 
2000 


2000 
1500 
1500 


$2500 

2500 


5000 


6000 


750 
4250 


1000 
4000 


500 
4500 


158 


Answers  in  Advanced  Bookkeeping 


Cash  2000 

Merchandise  1500 

Accounts  Receivable  1500 

Henry  Lang,  Personal  500 

Henry  Lang,  Capital  4500 

237.  Explanation: 

Cash  2000 

Merchandise  1 500 

Notes  Receivable  1 500 

Interest  Accrued  on  Notes  Receivable       10. 25 

Accounts  Payable  750 

John  Brooks,  Personal  260.25 

John  Brooks,  Capital  4000 

Cash  2000 

Merchandise  1000 

Notes  Receivable  3000 

Interest  Accrued  on  Notes  Receivable       15 

Accounts  Payable  800 

Henry  Lang,  Personal  12 15 

Henry  Lang,  Capital  4000 

238.  The  Manhattan  Chemical  Company  has  been  incorporated 
under  the  laws  of  the  State  of  New  Jersey  with  an  authorized  capital 
of  $25,000,  divided  into  250  shares,  each  of  a  par  value  of  $100. 
W,  L.  and  P.  W.  each  subscribe  for  100  shares,  the  balance,  remain- 
ing in  the  treasury. 

Subscriptions  $20000 

Unsubscribed  Stock  5000 

Capital  Stock  25000 

239.  Cash  20000 

Subscriptions  20000 

W.  L.  and  P.  W.  paid  their  subscrip- 
tions in  full 

240.  Subscriptions  2000 

Unsubscribed  Stock  2000 

J.  M.  subscribed  for  20  shares  of  stock. 

241.  Subscriptions  Preferred  Stock  2000 

Preferred  Stock  2000 


Answers  in  Advanced  Bookkeeping 


159 


Cash 

1000 

Subscriptions  Preferred  Stock 

1000 

Explanation. 

242. 

Explanation : 

Subscriptions 

30000 

Capital 

30000 

Patent  Rights  (James  Foster) 

18000 

Subscriptions 

18000 

Cash 

12000 

Subscriptions 

12000 

243. 

(a)  Treasury  Stock 

2000 

Donation 

2000 

(b)  Subscriptions 

2400 

Treasury  Stock 

2000 

Donations 

400 

Cash 

2400 

Subscriptions 

2400 

244. 

Reid,  Walker  &  Co.,  Subscriptions 

26000 

Unsubscribed  Stock 

24000 

Capital  Stock 

50000 

245. 

See  Answer  239 

246. 

Profit  and  Loss 

550 

Reserve  for  Bad  Debts 

550 

247. 

Reserve  for  Bad  Debts 

350 

Accounts  Receivable 

350 

248- 

250.  See  Answer  246 

251. 

No  Entry 

252. 

(a)  Profit  and  Loss 

400 

Reserve  for  Bad  Debts 

400 

(b)   Profit  and  Loss 

1000 

Dividends  Payable,  No.  I 

1000 

(c)   Profit  and  Loss 

1000 

Surplus 

1000 

(d)  Dividends  Payable,  No.  1 

1000 

Cash 

1000 

i6o 


Answers  in  Advanced  Bookkeeping 


i-7- 
Acct. 

Pay. 


General 


$12960 

954050 

925 

175 
2376 


4500 

27. 


75 


18169.25 


$669.50 


72 


250.00 

74i -50 

$99i • 50 


January  1912 


MAY    I,    I9II 


C.  W.  Harkins  and  T. 
J.-  Burke  have  this  day- 
formed  a  partnership  un- 
der   the    firm    name    of 
Harkins     &     Burke,     to 
carry  on  the  business  of 
the    former    in    Buffalo, 
N.  Y.,  investing: 
Cash,  Investment 
Merchandise,  Inventory 
Furn.  &  Fix.,  Inventory 
Expense,  Ins.  prepaid 
Acct.  Rec,  Schedule  A 

Notes  Pay.,  In  favor  of 
Barker 

Accrued  Int.,  On  note 
above 

Acct.  Pay.,  Schedule  B 

C.  W.  Harkins 
Notes  Rec,  Griffin's  Note 
Accrued  Int.,  On  above 

note 
Cash,  Investment 

T.  J.  Burke 

5 
Arthur  Kelly 

Richard  White 

10 

William  Anderson 

Notes  Payable 

Reserve  for  Bad  Debts 

Gorham  &  Co. 
Accounts  Payable,  Dr. 

Accounts  Rec,  Cr. 


General 


Acct. 
Rec 


$1300 

13 
1966. 

22697 


50 


22697 


$669.50 


72 


250 


9I9-50 


$991-50 


Owing  to  lack  of  space  and  the  difficulties  of  composition,  the  explanations  to 
the  various  Journal  entries  have  been  omitted.  The  approved  forms  of  the 
Sales  and  the  Purchases  Books  and  various  business  forms  are  illustrated  in  one 
or  two  sets  of  answers,  and  references  to  these  are  made  throughout  the  book. 
A  few  answers  have  been  placed  out  of  their  regular  position  in  order  to  preserve 
their  unity. 


Answers  in  Advanced  Bookkeeping 


161 


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Answers  in  Advanced  Bookkeeping 


For  Purchase  Book  and  Sales  Book,  see  Answers  January  1914. 

8.  SALES   LEDGER 


THOMAS   FLEMING 

May    3 

$354.00                 May  8 

D.    J.    MANNING 

$354  00 

May    8 

150                       May  12 

DAVID    NELSON 

150 

May  11 

210 

RICHARD    WHITE 

May     1 

1876                       May    5                   669.50 
May  31  Balance  1206.50 

GORHAM    &   CO. 

May     1 

500                       May  13 
May  13 

250 

250 

9- 

ACCOUNTS    RECEIVABLE 

May    1 
May  31 

$2376                       May  31 

714                       May  31 

May  31 

$919- 50 
754 
1416.50 

June  1 

$3090 
$1416.50 

ABSTRACT   OF    SALES   LEDGER 

$3090 

David  Nelson 

$210 

Richard  White 

I206. 50 

1416.50 

10.    STATEMENT    OF    INCOME,     PROFIT    AND    LOSS    OF     5.    JOHNSON, 

MAY  31.  I9II 

Sales  $35000 

Purchases  $30000 

Inventory  May  31,1911  '  5000 

Cost  of  Purchases  25000 

GROSS  PROFIT  ON  TRADING  $10000 


Answers  in  Advanced  Bookkeeping 


163 


Expenses: 

General  Expense 
Insurance 

Total  Expense 

income  from  operations 

Additions  to  Income: 

Merchandise  Discount 
Real  Estate  Appreciation 

Tuial  Additions 

income  for  period 
Deductions  from  Income 

Interest  and  Discount 
net  profit 

11.  See  Answers  1,23  and  132. 

12.  JOHN    BLAKE,    CAPITAL 


$3235 
225 

$3460 

$6540 

50 
500 

550 

7090 

40 

7050 


Dec.  31 


Jan. 


S7000 


7000 
2000 


Jan.      2 
Dec.  30 


$5000 
2000 

7000 


13.  (a)  See  Answer  123. 
(b)  Notes  Receivable 

Charles  Tracey 
Discount 
Explanation. 


$975 


$970.61 
4-39 


1 64 


Answers  in  Advanced  Bookkeeping 


June  1912 


1-7. 

Acct. 
Pay. 


JANUARY  2,  19 1 2 


General 


Henry  Fairley  continues 
the  business  of  Henry  Fair- 
ley    &   Co.  (Henry  Fairley 
and  Francis  King),  taking 
over  all  the  assets  and  lia- 
bilities of  the  firm  and  giv- 
ing King  a  six-month  note 
for  his  share  of  the  partner- 
ship settlement. 
$4410.90     Cash,  On  hand 
14928.62     Merchandise,  Inventory 
1 68 1  Furn.  &  Fix.,  Schedule 

5897-56     Acct.  Rec,  Schedule  A 
3842  Noted  Rec,  Schedule  B 

Acct.  Pay.,  vSchedule    C 
Notes  Pay.,  Schedule  D 
Interest,  Accrued 
Henry  Fairley 
Francis  King 
2 
7533  •  73     Francis  King 

Notes  Payable 

$547  •  50  Smith  &  Mason 

Notes  Payable 
25 
1000  Notes  Receivable 

William  White 
29 
38.72  G.  B.  Anderson  &  Son 

Returned  Purchase 

31 

586.22     Accounts  Payable,  Dr. 
Accounts  Rec,  Cr. 


General 


Acct. 
Rec. 


$3671.40 
12000 
22.  22 

75; 3 ■ 73 
7533-73 


d^o- /3 


547-50 


$1000 


38.72 


1000 


Answers  in  Advanced  Bookkeeping 


165 


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Answers  in  Advanced  Bookkeeping 


8. 


HENRY   GARLAND,    MAY   31,    1912 


Cash 

Notes  Receivable 

Account  Receivable 

Merchandise 

$1610.75 

945 
2291 .60 

6847.50 

$11694.85 
500 
8794.85 
$9294.85 

Account  Payable 
Present  Worth 

March  1 
Profit 

* 

$2400 
9294.85 

Withdrawals 
Present  Worth 

$11694.85 
8270 
1524- 85 
$9294 . 85 

9.  See  Answers  132,  120,  121,  122. 

10.  (a)  See  Answer  220(a).      (b)  See  Answer  229(6).      (c)  See 
Answer  15.     (d)  See  Answer  229  (a). 


11.  Subscriptions 

Capital  Stock 
Cash 

Subscriptions 

or 

$200000 
150000 

$200000 
150000 

Cash 

Unsubscribed  Stock 
Capital  Stock 

150000 
50000 

200000 

12.  See  Answers  14  and  4  (January  19 17). 


1. 


January  1913 

JOURNAL,    DECEMBER   31,    I912 


Accts.  Payable,  To  close 

$1792. 

50 

Notes  Pavable,  To  close 

2400 

Charles  Williams 

21489. 

86 

Henry  Groves 

21489. 

86 

Cash,  On  hand 

$6000 

Merchandise,  Per  Inventory 

22500 

Accts.  Receivable,  To  close 

5298.22 

Notes  Receivable,  To  close 

2810 

Expense,  Unused  coal,  etc 

239 

Furniture 

1800 

Real  Estate 

7500 

Delivery  Equipment 

800 

Insurance,  Unearned  premiums 

225 

Answers  in  Advanced  Bookkeeping 


167 


2. 


JOURNAL,    JANUARY   2,    I912 


Cash,  On  hand 

Merchandise,  Per  Inventory 

Accts.  Receivable,  Schedule 

Notes  Receivable,  Schedule 

Expense,  Unused  coal 

Furniture 

Real  Estate 

Delivery  Equipment 

Insurance,  Unearned  premium 

Unissued  Stock 

Good  Will 

Accts.  Payable,  Schedule 
Notes  Payable,  Schedule 
Capital  Stock 


3-  (a) 


Subscription 

Unissued  Stock, 


10 


$6qoo 

22500 

5298.22 

2810 

239 

1800 

7500 

800 

225 

1 0000 

7020.28 


$5000 


$1792.50 

2400 
60000 


$5000 


(*) 


Cash 


Subscription 


4.  (a)   Profit  and  Loss 
Reserve 
Dividends 
vSurplus 

(b)  Dividends 
Cash 


15 


5000 
9000 


5500 


5000 


1000 

5500 
2500 


5500 


5.  (a)  Consignment,  Geo.  Wilson  &  Co.,  No.  1       22. 10 

Cash  22.10 


(b)  general  commission  company 

Fruit  and  Produce  Commission  Merchants 

Rochester,  N.  Y.,  Jan.  8,  1913. 

Messrs.  George  Wilson  &  Co., 
Medina,  N.  Y. 

Gentlemen: 

Below    find   Account   Sales   of    Peaches    showing    net    proceeds 


1 68  Answers  in  Advanced  Bookkeeping 

$202.90,  for  which  please  find  enclosed  my  check  No.   74657  on 
Commercial  National  Bank,  payable  to  your  order. 
Respectfully  soliciting  the  continuance  of  your  favors, 


Yours  trulj 

r 

Shpt.  Jan  5. 

E.  &  0.  E. 

500  boxes  Peaches 

@   .50 

$250 

Charges 

Freight                                     $14.60 

Cartage                                        5 .  00 

Insurance                                      2 .  50 

Commission                                25 .  00 

c 

47- 

10 

■ 

$202. 

90 

Cash 

$250 

Consignment,  Geo.  Wilson  &  Co., 

No.  1 

$250 

Consignment,  Geo.  Wilson  &  Co.,  No. 

1           227. 

90 

Cash 

202. 

90 

Commission 

25- 

00 

6.  (a)  Shipment,  General  Com.  Co.,  No. 

1          468 

Merchandise 

350 

Cash 

118 

(6)   Cash 

603. 

75 

Shipment,  General  Com.  Co., 

No.  1 

603. 

75 

7.                                          JOURNAL,    JANUARY    I, 

1913 

Cash,  On  hand 

$2380 

Unfinished  Goods,  Inventory 

12570 

Finished  Goods,  Inventory 

4600 

Notes  Receivable,  Schedule 

1500 

Accts.  Receivable,  Schedule 

15420 

Plant 

50000 

Machinery  and  Tools 

12680 

Office  Fixtures 

1200 

Materials  and  Supplies 

10382 

Expense,  Unused  items 

560 

Accts.  Payable,  Schedule 

$15645 

Notes  Payable 

1 120 

Jones  Manufacturing  Co. 

94527 

8.  Notes  Payable 

3840 

Cash 

3002 

James  Wilson  6842 


Answers  in  Advanced  Bookkeeping 


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170  Answers  in  Advanced  Bookkeeping 

io.  (a)  From  the  Sales  Book  we  post  to  debit  side  of  the  respective 
accounts,  according  to  the  names  appearing  in  the  charges  in  the 
Sales  Book;  the  total  amount  of  sales  is  then  found  from  the  Sales 
Book  and  that  amount  is  posted  to  the  debit  side  of  the  Accounts 
Receivable  Account  and  to  the  credit  side  of  the  Merchandise  or 
Sales  Account  in  the  General  Ledger,  (b)  The  transactions  are 
posted  directly  from  the  Purchase  Book  to  the  credit  side  of  the 
respective  accounts  in  the  Purchase  Ledger,  and  the  total,  deter- 
mined from  the  Purchase  Book,  is  posted  to  the  credit  side  of  the 
Accounts  Payable  Account  and  to  the  debit  side  of  the  Merchandise 
or  Purchase  Account  in  the  General  Ledger. 

1 1 .  An  abstract  of  the  Sales  Ledger  is  a  statement  showing  the 
total  of  all  the  money  owed  us  by  our  debtors,  by  those  to  whom  we 
have  sold  goods.  It  proves  the  correctness  of  the  Accounts  Receiv- 
able Account  in  the  General  Ledger.  See  Answer  9,  January, 
1912. 

12. 


(a)  Cash 

$400 

Reserve  for  Bad  Debts 

600 

Henry  Pitkin 

$1000 

(&)  Cash 

300 

Reserve  for  Bad  Debts 

300 

June  1913 

5-6.    STATEMENT   OF    INCOME,    PROFIT   AND   LOSS,    JOHN   L.    MARCY, 

MAY  31,  I913 

Sales  $8746.40 

Returned  Sales  83.25 

Net  Sales  8663.15 

Cost  of  Goods  Sold: 

Inventory,  April  30,  1913  $9467- l8 

Purchases  $2876.43 

Returned  Purchases  ioo.  12 

Net  Purchases  2776 .  31 

Freight  Inward  46.25 

Total  Cost  of  Pur- 
chases 2822.56 

Total  Cost  of  Goods  1 2289 .  74 

Less  Inventory,  May  31,  1913  5827.63 

Cost  of  Goods  Sold  6462 . 1 1 

GROSS   PROFIT   ON   TRADING  220 1.  40 


Answers  in  Advanced  Bookkeeping  171 


267 . 50 

273-50 

12.00 

76.42 

629.42 

157102 

113.82 

113.82 

1685.44 

8.95 

174.18 

183.13 

1502.31 

Selling  Expenses 
Administrative  Expenses 
Insurance 
General  Expenses 

Total  Expenses 

INCOME  FROM  OPERATIONS 

Additions  to  Income: 

Discounts  on  Purchases 

TOTAL  INCOME  FOR  PERIOD 

Deductions  from  Income: 
Interest  and  Discount 
Discount  on  Sales 

Total  Deductions  from  Income 

NET    PROFIT 


7#  GENERAL   COMMISSION   COMPANY 

Fruit  and  Produce    Commission  Merchants 

New  York,  Jan.  29,  1913. 

Messrs.  J.  R.  Milton  &  Co., 
Lock  wood,  N.  Y. 

Gentlemen: 

Below  find  Account  Sales  of  Apples  showing  net  proceeds 
$316.09  for  which  please  find  enclosed  10-day  S/D  on  William 
Harvey,  Rochester,  N.  Y. 

Respectfully  soliciting  a  continuance  of  your  favors, 

Yours  truly, 

E.  &  O.  E. 

Shipt.  Jan.  7 


Received  100  bbl.  Apples 
Sold 

20  bbl.  Apples 

35 
30 
15 

("    $3  50 

3-75 
4.00 

3.80 

$378.25 

Charges 
Freight 
Storage 
Cartage 
Commission,  5% 

16.25 

15-50 
11.50 

18.91 

62.16 

$316.09 


172 


Answers  in  Advanced  Bookkeeping 


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Answers  in  Advanced  Bookkeeping  173 

$316— °Vioo  New  York,  January  31,  19 13. 

At  ten  (10)  days  sight Pay  to  the  order  of 

J.  R.  Milton  &  Co 

Three  Hundred  Sixteen— 09/ioo Dollars 

Value  received,  and  charge  to  the  account  of 

To  William  Harvey  General  Commission  Company. 

Rochester,  X.  Y. 

No.  7296.     Due 


8.  W.  M.  Thompson  $27106.50 
Goodwill  2893 .  50 
Unsubscribed  Stock                                  20000 

Capital  Stock  $50000 

The  Royal  Furniture  Company  is 
incorporated  to  take  over  business  of 
W.  M.  Thompson. 
Cash  $9000 

Unsubscribed  Stock  $9000 

Received  cash  from  J.  K.  P.,  G.  C. 
and  H.  C.  for  stock. 

9.  (a)  By  depositing  the  cash  and  checks  on  the  day  of  their 
receipt  we  are  protected  against  loss  of  the  funds  through  theft, 
etc.  The  canceled  checks  serve  as  receipts  for  all  the  money 
paid  out.  The  correctness  of  the  balance  in  the  Cash  Book  can 
be  very  easily  determined  by  means  of  the  balance  in  the  Check 
Book,  through  a  reconcilement  of  the  balances,  (b)  See  Answer  34, 
Imprest  Fund. 

10.  (a) 


(b) 

(c) 


Purchases 

Si532. 

80 

Naples  Manufacturing  Co. 

$1532.80 

Naples  Manufacturing  Co. 

1532. 

80 

Allowance  on  Purchase 

10.45 

Discount  on  Purchase 

15  23 

Notes  Receivable 

563  50 

Interest 

•      3  00 

Cash 

940 . 62 

Notes  Payable 

237 

50 

Johnson  &  Gray 

237  50 

Office  Salaries 

160 

Office  Expenses 

40 

00 

General  Expen  ■ 

200.00 

174  Answers  in  Advanced  Bookkeeping 


ii.  Consignment,  J.  P.  Milton  &  Co. 

43-25 

Cash 

43-25 

Freight  Payment: 

Cash 

378.25 

Consignment,  J.  P.  Milton  &  Co. 

378.25 

Consignment,  J.  P.  Milton  &  Co. 

335 

Commission 

18.91 

J.  P.  Milton  &  Co. 

316.09 

12.  (a)  Considerable  time  is  saved  in  the  making  out  of  the 
bills.  The  original  is  sent  to  the  consignee  and  the  others  are  dis- 
tributed among  the  various  departments.  The  bills  on  file  support 
the  records  in  the  Sales  Journal,  (b)  Debit  Accounts  Receivable 
Account,  and  credit  the  Sales  Account  in  the  General  Ledger. 

13.  Subtract  from  the  total  of  the  old  (merchandise)  inventory 
and  the  purchases  the  sum  of  the  sales  and  the  new  merchandise 
inventory.  The  difference  is  the  merchandise  gain.  The  total 
expenses  for  the  year  is  found  by  totaling  the  expense  column  in 
the  Cash  Book.  To  find  the  net  gain :  he  must  subtract  his  liabili- 
ties from  his  assets  to  find  his  present  worth;  the  present  worth 
minus  the  investment  will  give  him  the  net  gain  on  the  business. 

14.  (a)  See  Answer  91  (a),  (b)  See  Answer  91  (d).  (c)  See 
Answer  94.     (d)  See  Answers  122  and  227. 


Answers  in  Advanced  Bookkeeping 


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Answers  in  Advanced  Bookkeeping  177 


SALES    BOOK 

Brown  &  Potter,  City, 
10  vpc.  P.  S. 
10  D.  T. 

3 

1/2  cash,  90-day  note 

18 
8 
ton,  N.  J.,  B/L,  S/D 

40 
12.50 

$4O0 
I80 

$580 

Riley  and  Cohen,  Tren 
1  P.  S. 
1  I).  R.  S. 
3  B.  R.  S. 

Trade,  5' "0 

85 

45 
120 

$250 

1 

237- 

50 

Acct.  Receivable,  Dr. 
Sales,  Cr. 

3i 

PURCHASE   BOOK 

$817. 

50 

817 

50 

2 
John  Williams,  11-29 

Grand  Rapids,  Mich.,  5-10;  2-30;  n-90      1200  1200 

3i 
Purchase,  Dr.  1200 

Acct.  Payable,  Cr.  1200 

7-8.    STATEMENT  OF  INCOME,  PROFIT  AND  LOSS  OF  HENRY  WATKINS, 

DECEMBER  31,    I913 

Sales  $115*36 

Inventory,  Jan.  i,  1913  518572.50 
Purchases  95349  •  23 

Total  cost  of  Purchases  1 1 392 1 .  73 

Inventory,  Dec.  31,  1 9 1 3  21650 

Total  Cost  of  Goods  Sold  JP27 1    73 

GROSS  PROFIT  ON  TRADING  22864.  27 

General  Expense  5636 . 6 1 

Rent  6000 
Insurance  560 

Depreciation  on  Furniture  and  Fixtures  98 .  20 

Collection  and  Exchange  116.40 

Total  Expenses  124 11.21 

INCOME  FROM  OPERATIONS  IO453.06 

Additions  to  Income: 

Discounts  on  Purchases  2084  56 

Interest  Accrued  on  Notes  Receivable  126.50 

Total  Additions  to  Income  221 1 

TOTAL    INCOME    FOR    PERIOD  I2664.06 


178 


Answers  in  Advanced  Bookkeeping 


Deductions  from  Income: 
Discount  on  Sales 
Interest  and  Discount 

Total  Deductions  from  Income 

net  profit 


356o 
561.80 


4121 .80 
$8542 . 26 


9.  Investment 

Withdrawals 

Gam 

Present  Worth 

JOHN 

ALLEN 

$1500 
3517- 

99 

$4287.46 
730.53 

Investment 

Withdrawals 

Gain 

Present  WTorth 

GEORGE 

BACON 

700 

593- 

51 

1050 
243 -51 

Assets 
Liabilities 

7564 
3452. 

50 

Present  Worth 
Total  Investments 
Net  Withdrawals 

4111 . 

50 

5337.46 
2200 

Net  Investments 

Net  Gain 

Bacon's  share,  \  of  Net  Gain 

Allen's  share,  f  of  Net  Gain 


3I37-46 
974.04 


243=51 
730.53 


10. 


JOURNAL,    JANUARY    10,    I914 


John  Lyman  and  Davis  Norman 
become  partners  to  carry  on  the  retail 
hardware  business  investing : 
Cash,  On  hand 
Merchandise,  Inventory 
Notes  Receivable,  Schedule 
Real  Estate,  Inventory 

Mortgage  Pay.,  On  Store  and  Lot 

John  Lyman,  Investment 
Cash 

Notes  Payable,  D.  N.  to  A.  D. 

Davis  Norman,  Investment 


$1000 
4000 
1200 

1 1 000 


9000 


$9000 
8200 

800 
8200 


Answers  in  Advanced  Bookkeeping  179 

11.  (a)  See  Answer  229.  (b)  See  Answer  92.  (c)  See  Answer  91. 
(d)  See  Answer  220.  (e)  See  Answer  220.  (/)  An  account  with 
goods  which  we  have  sent  to  others  to  be  sold  on  commission,  and 
which  shows  a  loss  or  gain  on  the  shipment.  Cf.  Consignment 
Account,     (g)  Cf.  Account  Sales.     See  Answer  228. 

12.  (a)  A  voucher  check  is  a  check  which  shows  the  detailed 
items  for  which  the  check  is  payment.  It  is  a  combined  check 
and  receipt  for  the  items  so  noted,  (b)  The  petty  cash  book  should 
contain  a  complete  record  of  all  the  petty  cash  expenses,  these 
being  placed  on  the  credit  side,  the  amount  the  cashier  receives  for 
this  purpose  being  entered  on  the  debit  side.     See  Answer  34. 


13.  (a)  Consignment,  Fred  Mott 

772 

Cash 

772 

Cash 

2200 

Consignment,  Fred  Mott 

2200 

Consignment,  Fred  Mott 

1428 

Commission 

66 

Storage 

• 

40 

Cash 

1322 

13.  (b)  See  January  and  June,  1913. 


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181 


-^L 

October 

• 

i4.           13  ia 

At  ninety  days  after  eight          O 
npnrR  nr    CurBelves                                 wss'S    ,a 

Pay  to  the 
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Dollars 

VALUE   RECEIVED  AND  CHAROS  "9KO  S  A>  E  TO 

•    O      J 

T„    Strong*  Sons,                                   J  ^  o  Vulcan 
New  York,   N.   Y.                        \              /^j 

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Pay  to  the 
5000# 


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TO 


VALUE  RECEIVED  AND  CH&nGE^T-S^S&E  TO  ACCOUNT  OF 

a,  am  as 
Commercial  National  Bank        a  ^XggeAt  k   Price 


<l  3-^gg* 


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( 


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ACCEPTANCES 


1 82 


Answers  in  Advanced  Bookkeeping 


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Answers  in  Advanced  Bookkeeping 


183 


7-8.    TRIAL  BALANCE  OF  THE  EASTERN    PRODUCE,    MAY    31,     1914 

Henry  Bryson,  Investment  20000 

Charles  Hawley,  Investment  ioooo 

Smith  R.  Canfield,  Investment  ioooo 

Henry  Bryson,  Personal  2200 

Charles  Hawley,  Personal  1500 

Smith  R.  Canfield,  Personal  1250 

Real  Estate  20000 

Cash  9286 .  22 

Notes  Payable  3420 

Accounts  Receivable  8682 .  50 

Sales  13842.19 

General  Expense  462 .  30 

Doubtful  Accounts  610 

Furniture  and  Fixtures  360 

Salaries  and  Wages  3068.10 

Insurance  360 

Discounts  on  Purchases  120.30 

Purchases  8984 .  95 

Interest  and  Discount  40. 16 

Accounts  Payable  5424.36 

Merchandise  Inventory,  May  13,  1913      4120. 14 

Notes  Receivable  1560.18 

Discount  on  Sales  127 .  50 

Freight  Inward  194.80 


S62806.85     $62806.85 


STATEMENT  OF  INCOME  PROFIT  AND  LOSS  OF  THE  EASTERN   PRODUCE 

I3842.I9 


I9I4 


CO.,    MAY   31, 

Sales 

Inventory,  May  13,  19 13 

Purchases 

Freight  Inward 

Total  Cost  of  Purchases 
Inventory,  May  31,  19 14 

Total  Cost  of  Goods  Sold 

GROSS  PROFIT  ON  TRADING 

General  and  Administrative  Expenses 

General  Expenses 

Furniture  and  Fixtures  Depreciation 

Salaries  and  Wages 

Unpaid  Salaries 

Insurance 

Total  Expenses 

INCOME  FROM  OPERATIONS 


4120 
8984 

194 


I3299 
8496 


14 

95 
80 


89 
12 


4803  77 


9038 

42 

462 

30 

36 

3068. 

IO 

380. 

50 

120 

4066. 

90 

4971  52 


j  84  Answers  in  Advanced  Bookkeeping 

Additions  to  Income: 

Discounts  in  Purchases  120.30  120.30 

TOTAL  INCOME  FOR  PERIOD  509I  .  82 

Deductions  from  Income: 

Interest  and  Discount  40. 16 

Discount  on  Sales  127 .  50 

Doubtful  Accounts  610 


Total  Deductions  from  Income  777.66 

NET  PROFIT  43  J4-  l6 

9.  (a)  $1023— 64/ioo.                                 New  York,  June  1,  1914. 
At  sight Pay  to  the  order  of 

Henry  Waters 

One  Thousand  Twenty-three — 64/ioo Dollars. 

Value  received  and  charge  to  the  account  of 

To  Wallis  &  Irwin  Henry  Waters. 

Columbus,  O. 
No.  786.     Due 

(6)  Henry  Waters  places  it  in  his  bank  for  collection.  The  bank 
sends  it  to  its  correspondent  in  Columbus,  O.,  who  present  it  for 
immediate  acceptance  by  Wallis  &  Irwin. 

(c)  When  the  draft  has  been  accepted  and  paid,  the  entry  is 
Cash  $1023.64 

Wallis  &  Irwin  $1023.64 

10.  Cash  3600 

-    B.  H.  Berry  1400 

R.  O.  Clark  1200 

E.  B.  Arnold  1000 
E.  B.  Arnold  1000 

F.  C.  Doud  1000 
Cash  200 

F.  C.  Doud  200 

B.  H.  Berrv  20° 

Notes  Payable  200 

11.  (a)  See  Answer  221  (c).  (b)  See  Answer  220  (a),  (c)  See  An- 
swer 221  (/).  (d)  See  Answer  44.  (e)  See  Answer  220  (c).  (/)  See 
Answer  222.     (g)  See  Answer  222  (a). 

12.  The  columns  that  should  be  provided  are:  Voucher  number, 
date,  creditor,  voucher  payable  credit,  and  columns  for  the  distribu- 
tion of  the  amounts,  these  depending  upon  the  nature  of  the  busi- 
ness.    The  Purchase  Ledger  may  be  dispensed  with. 


Answers  in  Advanced  Bookkeeping 


185 


13.  (a)  The  difference  between  the  Net  Receipts  and  the  Net 
Payments  Columns  in  the  Cash  Book  gives  the  cash  balance.  See 
Answers  under  each  examination. 

(b)  Reconciliation  of  the  Bank  Balance: 

Total  deposits  (date)  $10000 

Total  checks  drawn  3050 

Bank  balance  6950 

Checks  outstanding  and  not  paid: 

$250,  $50,  Si  15,  585.  500 

True  balance  6450 

Balance  as  per  Cash  Book  6450 


January   1915 


JOURNAL,    OCTOBER    I,    I914 


Acct. 
Pay. 


General 


General 


Acct 
Rec. 


■>254-75 


The  Schenectady  Shoe 
Co.    is    incorporated    to 
take  over  the  shoe  busi- 
ness of  O.  P.  Henderson: 
$10000  O.  P.  Henderson 

1 0000  Unsubscribed  Stock 

Capital  Stock 
10 
87.50     F.G.Bills 

L.  M.  Brewster 

13 

150  Commission 

87.50     Traveling  Expenses 
Robert  Sullivan 

14 
Case  &  Hart 

Notes  Payable 

17 
145  Notes  Receivable 

Grady  &  Son 

31 


254.75      2047000     General,  Dr. 

254.75     Accounts  Payable,  Dr. 

General,  Cr. 
Accounts  Rec,  Cr. 


$20000 


$87.50 


237-50 


254- 75 


H5 


$20492.25  $232.50 
232  50 


For  Purchase  Book  and  Sales  Book  see  Answer  January  I9H- 


186 


Answers  in  Advanced  Bookkeeping 


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Answers  in  Advanced  Bookkeeping  187 

8-9.  trial  balance  of  summers  &  barrett,  december  31,  i914 


P.  D.  Summers,  Investment 

$4500 

D.  B.  Barrett,  Investment 

4500 

P.  D.  Summers,  Personal 

$250 

D.  B.  Barrett,  Personal 

300 

Cash 

1075 

Merchandise  Inventory,  Jan.  i,  191 4 

3845-87 

Purchases 

6397-43 

Sales 

7453- 

18 

Discount  on  Purchases 

386. 

19 

Discount  on  Sales 

483-74 

Collection  and  Exchange 

43-25 

General  Expense 

843  98 

Interest  and  Discount 

27- 

52 

Rent 

1125 

Freight  Inward 

328 

Furniture  and  Fixtures 

890 

Salaries 

675 

Accounts  Receivable 

1684.62 

Accounts  Payable 

1500 

Notes  Receivable 

925 

Notes  Payable 

500 

$18866.89    $18866.89 


STATEMENT    OF    INCOME,  PROFIT  AND   LOSS,  OF    SUMMERS  &  BARRETT, 

DECEMBER   31,    I914 


Sales 

>7453-i8 

Inventory,  January  I,  1914 

$3845-87 

Purchases 

6397-43 

Freight  Inward 

328 

Total  Cost  of  Purchases 

IO57I.3O 

Inventory,  December  31,  19 14 

6974   25 

Total  Cost  of  Goods  Sold 

3597  05 

GROSS  PROFIT  ON  TRADING 

3856.13 

General  and  Administrative  Expense: 

General  Expense 

843.98 

Rent 

1250 

Salaries 

675 

Furniture  and  Fixture  Depreciation 

89 

Total  Expenses 

2857-9* 

INCOME   FROM    OPERATIONS 

998.15 

188 


Answers  in  Advanced  Bookkeeping 


Additions  to  Income: 
Discounts  on  Purchases 
Interest  and  Discount 
Interest  Due  on  Notes  Receivable 

Total  Additions  to  Income 

TOTAL  INCOME  FOR  PERIOD 

Deductions  from  Income: 
Discount  on  Sales 
Collections  and  Exchange 
Interest  on  Notes  Payable 
Total  Deductions  from  Income 

NET  PROFIT 


10. 

accounts  receivable 

$12895.37 

$5468 . 

93 

Bal 

.    7426 

44 

$12895.37 

12895 

37 

A. 

H.  Burtis 

419 

29 

C. 

E.  Snyder 

1543 

27 

M 

V.  Hughes 

1128 

19 

T. 

E.  Baker 

1324 

52 

M 

A.  Hurst 

1 196 

45 

F. 

M.  Andrews 
.  Balance 

1814 

72 

Dt 

$7426 

44 

Bal. 


386.19 

27.52 

11.25 

424.96 

1423- II 

483.74 

43  25 

l 

4-75 

53L74 

891.37 

ACCOUNTS    PAYABLE 

$2128.43 

$5195-47 

3067 . 04     . 

$519547 


$5195-47 


346. 19  W.  K.  Landers 

819.26  E.  M.  Griffin 

1324.75  H.  B.  Cook 

576.84  A.  R.  Kempton 


$3067.04     Cr.  Balance 


11.  (a)  Rebates  and  allowances  are  deductions  or  reductions  in 
prices  from  the  list  prices  of  merchandise  made  for  various  purposes. 
(b)  Royalty  is  a  fixed  compensation  paid  to  the  owner  of  a  patent 
or  a  copyright  for  its  use.  (c)  Commission  is  a  percentage  of  the 
amount  of  sales  paid  or  retained  by  the  agent  for  his  services  in 
making  or  effecting  the  sales,  (d)  Trading  Account  is  the  Merchan- 
dise Account.  See  Answer  II.  (e)  Bank  reconcilement  is  the  check- 
ing up  of  the  bank  book  and  the  check  book  to  determine  the  actual 
and  real  balance  by  deducting  uncanceled  checks  from  the  amount 
of  the  bank  book  balance.  See  Answer  13,  June,  1914.  (f)  Freight 
out  are  the  charges  paid  on  merchandise  shipped  or  outgoing  freight. 
\g)  See  Answer  221(c).     (h)  See  Answers  8(b),  10  and  13. 

12.  (a)  See  Answers  January  and  June  1913.  (&)  Amount  of 
Check,  $228.25. 


Answers  in  Advanced  Bookkeeping 


189 


June  1915 

5-6.    STATEMENT    OF    INCOME,   PROFIT    AND    LOSS    OF    TRAINOR    & 

WARNER,   MAY  31,    I915 

Sales 

Returned  Sales 

Net  Sales 

Inventory,  Dec.  I,  1914 

Purchases 

Returned  Purchases 

Net  Purchases 
Freight  Inward 

Total  Cost  of  Purchases 
Total  Cost  of  Goods 
Inventory,  May  31,  191 5 
Total  Cost  of  Goods  Sold 

GROSS  PROFIT  ON  TRADING 

Selling  Expenses: 

Delivery  Automobiles  Depreciation 

Advertising 

Commissions 

Traveling  Expenses 

Total  Selling  Expenses 

General  and  Administrative  Expenses 

Furniture  and  Fixtures  Depreciation 

General  Expense 

Salaries  and  Wages 

Insurance 

Total  General  and  Administrative  Expenses 

Total  Expenses 

INCOME  FROM  OPERATIONS 

Additions  to  Income: 
Discount  on  Purchases 

TOTAL  INCOME  FOR  PERIOD 

Deductions  from  Income: 
Interest  and  Discount 
Discount  on  Sales 
Total  Deductions  from  Income 

NET  PROFIT  1 63 IO 

7.  (a)  See  Answers  230-231.     (b)  See  Answer  232. 


$140000 
2500 

$95000 
3250 

6000 

$137500 

91750 
1650 

93400 

99400 
9000 

90400 
47100 

500 
2500 
4700 

6000 

13700 

200 

8500 
6300 

210 

uses 

1 52 10 

28910 

18190 

1440 

1440 

19630 

520 
2800 

3320 

190 


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8.  june  i,  1915 

The  Home  Manufacturing  Company 
is  incorporated  to  acquire  and  conduct 
the  business  of  the  firm  of  R.  O.  Brown- 
ing &  H.  E.  Johnson,  taking  over  the  fol- 
lowing assets:' 

Real  Estate 
Tools  and  Equipment 
Raw  materials 
Unsubscribed  Stock 
Capital  Stock 


$120000 
60000 
20000 
50000 


$250000 


Subscriptions 

Unsubscribed  Stock 


Cash 

Subscriptions 

Treasury  Stock 
Donations 


10 


14 


20000 


20000 


20000 


20000 


20000 


20000 


9.  (a)  See  Answer  229(6).  (b)  See  Answer  133.  (c)  See  Answer 
elsewhere  in  book,  (d)  See  Answer  90(a)*  (e)  See  Answer  90(6). 
(/)  See  Answer  6.  (g)  See  Answers  30,  31.  (h)  See  Answer  229(a). 
(i)  See  Answer  56. 


10. 


DEBIT    SIDE 


Accounts  Receivable,  Cr. 

Sales,  Cr. 

Discounts  on  Sales,  Dr. 

Sundries,  Cr. 

Net  Receipts,  Dr.  (Cash) 


$5372.10 
1250.40 

352 • 70 
3479.20 

9749 


CREDIT    SIDE 

Accounts  Payable,  Dr. 

Expense,  Dr. 

Sundries,  Dr. 

Discounts  on  Purchases,  Cr. 

Net  Payments,  Cr.  (Cash) 

11.  See  Answers  189-199. 

12.  See  Answer  27. 


3948.27 

217-34 
5120. 10 

249.61 

9036. 10 


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PURCHASE    JOURNAL 

Nov.   3     Smith  Bros.,  Amsterdam,  N.  Y.,  5-10, 

2-30,  n-90  $1540 

9     Sanford  &  Co.,  Phila.,  Pa.,  5-10,  2-30, 

n-90  1290 

12     Michigan    Furn.    Co.,    Grand    Rapids, 

Mich.,  60-day  note  953 

30  Purchases,  Dr.  $3783 

Acct.  Payable,  Cr.  $3783 

SALES  journal 

Nov.   4     John  White,  City,  Cash,  300;  bal.  on  acct. 
19     Donald  Morgan,  5-10,  2-30,  n-90 

29  Henry  Lamb,  60-day  note 

30  Acct.  Receivable,  Dr. 

Sales,  Cr.  2415 

2.  (a)  See  Answer  220(g).  (b)  A  waybill  is  a  list  made  up  by  the 
common  carrier  of  the  goods  carried  by  each  car  and  train,  giving  a 
description  of  the  goods  and  the  shipping  directions,  (c)  See 
Answer  132(b).  (d)  See  Answer  228  and  elsewhere  in  book,  (e) 
An  open  or  running  account.  (/)  See  Answer  221(e).  (g)  See  An- 
swer 91(d).     (h)  See  Answer  122(c). 

3.  See  Answers  13,  June  1913,  231  and  232. 


journal 

Accounts  Payable 
Notes  Payable 
H.  M.  Kerr 
O.  E.  Weir 

Accounts  Receivable 

Raw  Materials 

Plant 

Real  Estate 

Cash 

Finished  Goods 

To  close  the  old  books 

Accounts  Receivable 

Raw  Materials 

Plant 

Real  Estate 

Cash 

Finished  Goods 

Good  Will 

Unsubscribed  Stock 

Accounts  Payable 

Notes  Payable 

Capital  Stock 
To  open  the  books  of  the  Corporation 


$4800 

1500 

30000 

20000 


$12000 
9000 
9000 
1 0000 
7600 
8700 


$56300    $56300 

$12000 

9000 

9000 

1 0000 

7600 

8700 

1 0000 

15000 

$4800 
1500 

7500Q 

$81300    $81300 


Answers  in  Advanced  Bookkeeping 


197 


Subscriptions 

Unsubscribed  Stock 
(Or  separate  entry  for  each  subscriber.) 


3000 


3000 


5-6.     statement  of   income,   profit 

young,  december  31, 

Sales 
Return  Sales 

Net  Sales 

Inventory,  January  i,  1915 

Purchases  $64396 . 

Returned  Purchases  1167. 

Net  Purchases  $63228 . 

Freight  Inward  1246. 

Total  Co  ;t  of  Purchases 

Total  Cost  of  Goods 
Inventory,  December  31,  1915 

Total  Cost  of  Goods  Sold 

GROSS  PROFIT  ON  TRADING 

Selling  Expenses: 
Delivery  Equipment  Depreciation 
General  and  Administrative  Ex- 
penses: 
Furn.  and  Fix.  Depreciation  160 

General  Expense  6332 . 

Insurance  135 

Rent  2400 

Total  General  and  Admin.  Exp. 

Total  Expenses 

INCOME  FROM  OPERATIONS 

Additions  to  Income: 

Discounts  on  Purchases 

Accrued  Interest  on  Notes  Receivable 

Interest  and  Discount 

Total  Additions  to  Income . 

TOTAL  INCOME  FOR  PERIOD 

Deductions  from  Income 

Discounts  on  Sales 

Accrued  Interest  on  Notes  Payable 

Total  Deductions  from  Income 

NET  PROFIT 

Distribution  of  Net  Profits: 
Paul  Wilson 
Carl  Young 

Total 


AND    LOSS    OF     WILSON     & 

1915 

$94392 . 40 
I762.5O 

$92629.90 


82 


93 
75 


45 


8471.20 


64475.68 

72946.88 
9700 


$120 


63246.88 
$29383.02 


9027.45 


961.30 
112.50 
210.42 


1975.80 
61.25 


9741 -37 
9741-37 


9147 -45 


-0235.57 


1284.22 


2I5I9-79 


2037  5 


19482- 74 


$19482.74 


198 


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200  Answers  in  Advanced  Bookkeeping 

See  Answers,  January  and  June  19 14,  and  January  19 16,  for 
Sales  and  Purchase  Books. 

2.  STATEMENT   OF   INCOME,    PROFIT  AND  LOSS   OF   KLEIN   &   JONES, 

APRIL   30,    I916 

Sales  $15027.90 

Returned  Sales  90.56 

Net  Sales 

Inventory,  January  1,  1916 

Purchases 

Returned  Purchases 

Net  Purchases 
Freight  Inward 

Total  Cost  of  Purchases 

Total  Cost  of  Goods 
Inventory,  April  30,  1916 

Total  Cost  of  Goods  Sold 

GROSS  PROFIT  ON  TRADING  6377  .  94 

Selling  Expenses: 

Advertising  495 

General  and  Administrative  Exp. : 

General  Expense  780.97 

Wages,  Paid  and  unpaid  1585 

Rent  800 

Office  Equipment  Depreciation  28.50 

Total  General  and  Admin.  Exp.  319447 

Total  Expenses  3689 .  47 

INCOME  FROM  OPERATIONS  $2688  .  47 

Additions  to  Income: 

Discount  on  Purchases  259.40 

INCOME   FOR    PERIOD  $2947.87 

Deductions  from  Income: 

Discount  on  Sales  323  •  64 

Interest  on  Discount  85.33 

Total  Deductions  from  Income  408.97 

NET    PROFIT  $2538.90 

Distribution  of  Net  Profits: 

*A.  R.Klein  1269.45 

W.  P.  Jones  1269.45 

*  It  is  assumed  that  the  partners  share  profits  and  losses  equally. 

3.  (a)  The  new  ledger  contains  the  following  new  accounts: 
Capital  Stock,  Subscriptions,  Unsubscribed  Stock,  Treasury  Stock. 
No  partner's  names  appear  in  the  corporation  books,  but  in  the 
stock  certificate  register,  (b)  In  a  partnership,  the  total  profits 
are  divided  between  the  partners  according  to  the  terms  of  their 
agreement;  but  in  a  corporation  the  profits  are  apportioned  among 
all  the  stockholders,  according  to  the  nature  of  their  stock  holdings 
each  share  of  stock  receiving  a  certain  per  cent  of  the  profits.  The 
surplus  is  the  remainder  of  the  profits  after  the  dividends  have  been 
paid. 

4.  See  Answers  elsewhere  in  book  for  the  business  forms  required. 


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Answers  in  Advanced  Bookkeeping  ^03 

2.  statement  of  income,  profit  and  loss  of  dickinson  &  gray, 

december  31,  i916 

Sales  $22816.55 

Returned    Sales  125875 

Net  Sales  $21557.80 

Inventory,  January  1,  1916  12393.45 

Purchases  13516.80 

Returned  Purchases  895  40 

Net  Purchases  1 262 1 .  40 

Freight  Inward  75°  95 

Total  Cost  of  Purchases  .  13372-35 

Total  Cost  of  Goods  25765 .  80 

Inventory,  December  31,  1916  15325.48 

Total  Cost  of  Goods  Sold  10440  32 

GROSS  PROFIT  ON  TRADING  $11117    48 

Selling  Expenses: 

Traveling  Expenses  1185.25 

Motor  Trucks  Depreciation  393  75 

Total  Selling  Expenses  $1579 

General  and  Administrative  Expenses: 
General  Expense  3772.61 

Rent  800 

Wages,  Paid  and  unpaid  1665 

Furniture  and  Fixture  Depreciation         78 
Total  General  and  Administrative 

Expenses  6315.61 

Total  Expenses  $7894.61 

INCOME  FROM  OPERATIONS  S.^222  .  87 

Additions  to  Income: 

Discounts  on  Purchases  $1240. 64 

Interest  and  Discount  19-73 

Accrued  Interest  on  Notes  Rec.  26. 14 

Total  Additions  to  Income  1286.51 

INCOME  FOR  PERIOD  45°9  •  3$ 

Deductions  from  Income: 

Discounts  on  Sales  $1528.38 

Accrued  Interest  on  Notes  Payable  12.81 

Total  Deductions  from  Income  I541    *9 

NET  PROFIT  2968.  19 


204 


Answers  in  Advanced  Bookkeeping 


Distribution  of  Net  Profits: 

C.  E.  Dickinson 
E.  L.  Gray 

C.  E.  Dickinson 
E.  L.  Gray 

3.  See  Answer  96. 


Or 


1780.92 
1187.27 

$1484.09 
1484. 10 


BALANCE    SHEET    OF    PRICE    &    MILLER 


CURRENT  ASSETS 

Cash  Sxxxx .  xx. 

Acct.  Rec.  xxxx.xx 

Notes  Rec.  xxxx.xx 

Mdse.  xxxx.xx 


Fixed  assets 

Fur.  &  Fix.  $xxxx.xx 

Real  Estate  xxxx.xx 


bxxxx.xx 


xxxx.xx 


CURRENT  LIABILITIES 

Acct.  Pay.  $xxxx.xx 
Notes  Pay. 


xxxx . xx 


FIXED    LIABILITIES 

Mort.  Pay. 

PROPRIETORSHIP 

Invest.  $xxxx.xx 
Withdraw.      xxx .  xx 

Net  Invs.  $xxxx.xx 
Net  gain  xxx .  xx 

Pres.  worth- 
Invest.         $xxxx.xx 
Withdraw.      xxx .  xx 

Net  Invs.  xxxx.xx 
Net  Gain  xxx.xx 
Pres.  worth- 


2968. 19 
2968. 19 


Sxxxx .  xx 


xxxx . xx 


xxxx . xx 


Sxxxx .  XX 


XXXX . XX 

Sxxxx .  XX 


4.  Controlling  Accounts.  See  Answers  14  and  43.  The  advan- 
tages are  that  the  use  of  these  accounts  allow  more  than  one  book- 
keeper to  work  upon  a  set  of  books  at  one  time;  that  the  head  book- 
keeper has  a  check  upon  the  assistants  in  charge  of  the  subordinate 
ledgers;  in  case  of  emergency  the  trial  balance  can  be  made  avail- 
able for  the  construction  of  the  statements,  verification  being  made 
as  soon  as  possible  with  the  subsidiary  books;  the  labor  of  making 
trial  balances  is  considerably  lessened  due  to  the  fact  that  they 
enable  us  to  localize  errors. 

Columnar  Books  possess  the  following  advantages:  They  facili- 
tate the  work  of  classifying  the  items  posted  to  the  various  sub- 
ordinate ledgers,  and  of  posting  their  totals  to  the  controlling  accounts 
in  the  general  ledger;  they  enable  us  to  present  facts  in  the  general 
ledger  in  summary  form,  thus  making  monthly  and  annual  com- 
parisons easy;  they  enable  us  to  introduce  controlling  accounts 
with  all  their  advantages.     They  are  time  and  labor  savers. 


Answers  in  Advanced  Bookkeeping 


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206 


Answers  in  Advanced  Bookkeeping 


2.  Cash 

$1500 

C.  E.  Burns 

$1500 

Freight  Inward 

76.80 

Cash 

76.80 

Western  Grain  Co. 

76.80 

Freight  Inward 

76.80 

Purchases 

1072 

Western  Grain  Co. 

1072 

Cash 

425 

Sales 

425 

Cash 

344 

Sales 

344 

Cash 

19.20 

Sales 

19.20 

Expense 

5-65 

Cash 

5-65 

Expense 

6.40 

Cash 

6.40 

CLOSING   ENTRIES 

Sales 

788.20 

Inventory,  June  13,  191 7 

452-25 

Purchases 

1072 

Profit  and  Loss 

168.45 

Profit  and  Loss 

12.05 

Expense 

12.05 

Profit  and  Loss 

156.40 

C.  E.  Burns 

156.40 

3.   (a)  Dividend 

$6000 

Surplus 

1 0000 

Undivided  Profits 

2765.20 

Profit  and  Loss 

$18765.20 

(b) )  Profit  and  Loss 

7I3-52 

Reserve  for  Bad  Debts 

7I3-52 

4.  Sight  draft  with  B/L  attached. 

Check.     See  Answers   125, 

132, 138. 

5.  See  Answers  125,  132,  138. 

6.  Balance  Pass  Book 

Balance  Check  Book  $972. 13 

Outstanding  Checks: 

$324.89,  $63.14,  $263.84,  $73-28,  $276.88  =  1002.03 
Interest  on  bank  balance  14 .23 

$1988.39 
215 


$1986.24 


Collection  and  Exchange 


$1986.24  $1986.24 


Answers  in  Advanced  Bookkeeping 


207 


7- 

ASSETS 


Cash 

Acct.  Rec. 
Mdse.  Inv. 
Motor  Trucks 

Total 


BALANCE    SHEET,    JANUARY    2,     I917 
LIABILITIES 

$3465 .  40  Salaries  and  Wages 

4375.20  Notes  Pay. 

8145  Acct.  Pay. 

1265  Int.  Accrued,  N.  P. 

$17250.60     Total 

Present  worth 


$17250.60 


$1869.50 
7200 

1234  75 


56 


110360 
6889 


$17250  60 


40 


65 
95 


ASSETS 


BALANCE    SHEET,    MARCH    31,    I917 

LIABILITIES 


Cash 

Mdse.  Inv. 
Acct.  Rec. 

Total 


$958.60 

9615 
43H- 25 
$14887.85 

$1488785 


Present  Worth,  January  2,  191 7 
Present  Worth,  'March  31,  191 7 

Losses  during  period 


Acct.  Pay. 
Notes  Pay. 
Salaries  and  Wages 

Total 
Present  Worth 


January  1918 


$3978.84 
9675 

345  50 

$13999  34 
888.51 

Si  4887. 85 

50889.95 
888.51 

56001 . 44 

(a).      TRIAL  BALANCE  OF  HILL  &  HALE,  J 

QNE  ;o,  191 7 

A.  W.  Hill,  Capital 

$6000 

E.  E.  Hale,  Capital 

4000 

A.  W.  Hill,  Private 

$2.-0 

E.  E.  Hale,  Private 

175-35 

Cash 

672 . 40 

Accounts  Receivable 

2165.84 

Merchandise  Inventory,  Dec.  31,  1916 

7787.11 

Purchases 

8400 

Sales 

12560.50 

Returned  Sale; 

250 

Traffic  Equipment 

1400 

Notes  Payable 

500 

Rent 

600 

Freight  Inward 

3 1 2 . 60 

Advertising 

200 

Discounts  on  Purchases 

168.40 

Expenses 

1015.60 

$23228.90 

$23228.90 

208  Answers  in  Advanced  Bookkeeping 

2    (b)  CLOSING    ENTRIES 


Merchandise,  Inventory,  New 

$8373-67 

Sales 

12560.50 

Merchandise  Inventory,  Old 

$7787-11 

Purchases 

840 

Returned  Sales 

250 

Freight  Inward 

312.60 

Freight  Unpaid 

18.75 

Profit  and  Loss 

4165.71 

Profit  and  Loss 

190 

'  Advertising 

80 

Equipment 

1330 

Advertising 

200 

Equipment 

1400 

Profit  and  Loss 

157740 

Expenses 

38.20 

Expenses 

1015.60 

Rent 

600 

Discounts  on  Purchases 

168.40 

Profit  and  Loss 

168.40 

Profit  and  Loss 

5 

Interest  Accrued  on  Notes  Payable  5 

2.    (c)    STATEMENT  OF  INCOME,   PROFIT  AND  LOSS  OF   HALE  &  HILL, 

JUNE   30,    191 7 

Sales  $12560.50 

Returned  Sales  250 


Net  Sales  $12310.50 

Inventory,  December  31,  1916  7787.  n 

Purchases  .  8400 

Freight  Inward,  Paid  and  unpaid  331 .35 

Total  Cost  of  Purchases  16518.   6 

Inventory,  June  30,  191 7  8373.67 

Total  Cost  of  Goods  Sold  8144.79 

GROSS  PROFIT  ON  TRADING  4165.  71 

Selling  Expenses: 


Traffic  Equipment  Depreciation 
Advertising  Expenses,  Prorated  120 

Total  Selling  Expenses  190 

General  and  Administrative  Expenses: 
Rent  600 

Expenses  (less  unused  items)  977.40 

Total  Administrative  and  General  Expenses:        1577.40 

Total  Expenses  1767.40 

INCOME  FROM  OPERATIONS  2398. 3I 


Answers  in  Advanced  Bookkeeping  209 

Additions  to  Income: 

Discounts  on  Purchases  168.40         168.40 

income  for  period  2566.71 

Deductions  from  Income: 

Interest  Accrued  on  Notes  Payable  5  e 


net  profit  _\^6i  .71 

3.  (a)  See  Answers  120-122.     (b)  See  Answers  123-126. 

4.  See  Answers  34;    I,  June,  19 16  (May  31). 

1.  journal,  july  2,  1917 


Pay."         General  General       ^ 


$365  75       Purchases 

Cortland  Cement  Co.    S365  .  75 

9 
275  Notes  Receivable 

H.  Barber  &  Co.  £275 

10 
702.50     J.  H.  Case  &  Son 
450  Fairchild  Lumber  Co. 

Sales  1152.50 

12 
245 .  50     Notes  Receivable 

Sullivan  Building  Co.  245 .  50 

$454.50  Tonawanda  Lumber  Co. 

Notes  Payable  454.50 

814.40     Purchases 

Louisiana  Cypress  Co.    814.40 

15 
814.40  Louisiana  Cypress  Co. 

Notes  Payable  .      814.40 

3i 

£1268.90     Accounts  Payable,  Dr. 

Accounts  Rec,  Cr.        $520.50 


2IO 


Answers  in  Advanced  Bookkeeping 


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